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IRS Form 2210 walkthrough - ARCHIVED COPY - READ COMMENTS ONLY
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- เผยแพร่เมื่อ 27 ก.พ. 2023
- This is an older copy of the video we produced on IRS Form 2848. If you came to this video from another link, I apologize for the inconvenience.
Please feel free to review the comments to see if any of them are of benefit to you. To watch the most up to date version of this video, please check out this link instead: • IRS Form 2210 walkthro...
For someone filing 1040-NR, should taxes on Schedule NEC income be added to line 2 of this form? The instructions don't mention this as far as I can see. Thank you.
This is a good question. I would stick to the literal interpretation of the instruction, and only include the items outlined in the form instructions, which come from Schedule 2. I've attached some resources on Schedule 2 for reference:
IRS Schedule 2, Additional Taxes
Article: www.teachmepersonalfinance.com/irs-schedule-2-instructions/
Video: th-cam.com/video/Yb_AwqA_sPM/w-d-xo.html
@@teachmepersonalfinance2169 I see. Although, after further review I see that according to form 2210 instructions nonresidents must include 1042-S withheld taxes for line 6, I think it wouldn't make sense to do this while not including NEC taxes in line 2. Additional, in instructions for 1040 and 1040-NR line 24 is mentioned when referring to "total taxes" (minus credits) to describe how the penalty must be assessed. I'm a bit confused but I guess including NEC income would be the safe move.
@@enriquedacostacambio You absolutely can include the Schedule NEC income, and that would be considered a conservative move. I'll offer my thoughts below for consideration, but if you choose to include the NEC income, then there's probably not a downside to that.
Form 1042-S is a report of U.S. source income, while Schedule NEC is for income not related to a U.S. trade or business. I see these as two different categories of income, and not necessarily related.
When I'm in doubt, I go by the literal interpretation of the form instructions. If the form instructions are clear and concise, I would feel comfortable in the case of an audit defending my position. At that point, it would be the responsibility of the auditor to show me an authority that refutes the guidance found in the instruction.
@@teachmepersonalfinance2169 Thank you for the advice. I was thinking about NEC dividends, aren't those reported in a 1042-S too? Anyway, I guess I would make sense to follow the form to the letter and see what happens.
Please walk through the AI schedule. It would be great to know where an end-of-year capital gain distribution from a mutual fund company belongs.
I created a short video, which I hope comes through okay. th-cam.com/video/MMbwYmZDMSw/w-d-xo.html
Could you please do a walk through for the annualized income installment wksheet 2-7, pub 505. Do we prorate the std deduction for each of the periods or enter the full std deduction in the columns for each period?
Also how does one estimate how much ordinary and qualified dividends will be paid for next yr or how much cap gains a fund will have next yr? If we have an IRA distribution of $10k in Feb, do we enter $10k in all 4 columns?
Hi! We looked into doing a walkthrough for the AI installment worksheet, as well as the Schedule AI. Unfortunately, there were a couple of technical issues that I wasn't able to figure out. As a result, the video wouldn't be very helpful if I posted it.
To answer your questions:
-You should enter the standard deduction (as determined in Worksheet 2-4) across all four columns.
-Estimating dividends: If you use the previous year's dividend payments as an estimate, you'll probably be pretty close. If you have only one or two holdings, you may even be able to incorporate any announced dividend increases into your estimate.
-Estimating mutual funds cap. gains distributions. This is tougher. However, funds normally distribute cap. gains in December, so you probably can use last year's number as an estimate, then incorporate that number into the AGI figure in Column (d) only (1/1 through 12/31).
-February IRA Distribution: If it occurs in February, then this should be reflected in the AGI number (Line 1) across all four periods (1/1 - 3/31, 1/1 - 5/31, 1/1 - 8/31, 1/1 - 12/31).
I hope this helps!
Because I've received this question from several people, I went ahead and attempted to make a video. I hope it comes through all right. th-cam.com/video/MMbwYmZDMSw/w-d-xo.html
Is there a version of 2210 AI that self calculates? One should be able to enter the income cash flows in line 1, enter actual quarterly estimated payments in line 11. Then, hit calculate and the mind-numbing, tedious calculation would be automated. HELP!!!
Generally, tax preparation software will auto-complete fields where applicable.
For example, in TurboTax, much of the information on the Form 2210 itself comes from the tax return itself. From there, the software determines whether the Form 2210 needs to be completed and inputs certain information accordingly.
But with the AI method, you will have to provide information from your own records, which the software cannot replicate for you. If there is no difference between the Schedule AI and the form itself, then you probably don't need to file Schedule AI.
But if you're providing information from your records, then TurboTax probably can perform the calculations on what you still owe.
I am trying to fill the form and I see that line 25 and 26 in schedule AI contain circular reference - 25 depends on 26 and 26 depends on 25, so the form cannot be filled. Is there a typo? Did anyone had a problem? What is the correct procedure handling lines 22-27?
I understand your reasoning. However, this is correct. When you proceed through Schedule AI, you'll start in the left-most column (column a). In Column a, there is no Line 25, so you'll simply drop the value from Line 24 into Line 26. After determining whether Line 23 or Line 26 is smaller, you'll place that smaller value into Line 27, and you'll carry that value over to Line 23 in the next column (Column b).
Once you're in Column B, your Line 25 value is: Line 27 (Column A) MINUS Line 26 (Column A).
In other words, Line 26 of the column depends on the Line 25 value of THAT column. Line 25 of a column (except for column A) depends on the Line 26 of the PREVIOUS column.
I hope this clarifies it for you.
@@teachmepersonalfinance2169 It then looks as a linguistic question: what "that" means in the sentence "Subtract line 27 of the previous column from line 26 of that column". I thought "that" is "current" (for which sentence applies), but it looks it means "previous" per your description. So it carries the value to next quarter. Is the rationale is to calculate tax for current quarter, assuming that prediction over the year based on this quarter, then compare it against the actual 90% of tax spread equally over quarters? But what is the purpose of carryover? And, in my case, I have +1000, -800, +1500, +590 differences if I subtract payments on quarter ends from line 27. The software I was using did not tell about penalty, but IRS computed something without AI and it is larger than it should be from these numbers. And how to treat negative difference (above) for penalty compensation? Thanks a lot!
@@celsiusswatt6021 It's hard for me to give you specific advice without actually seeing the form. The purpose of Schedule AI would be to help lower your estimated tax burden (or to calculate a lower penalty) if your income was significantly impacted by a taxable event late in the tax year. However, you do not have to use Schedule AI if it doesn't result in much in the way of tax savings. Also, it seems that you shouldn't have a negative carryover from one quarter to another, but I wouldn't be able to tell specifically without looking at the tax form. It might be worth walking through this tax form in person with a tax professional in your area.
Please feel free to check out our article, where we've written step by step instructions to help you walk through this tax form! www.teachmepersonalfinance.com/irs-form-2210-instructions/
If you’re looking for tutorials for other IRS Forms that you can file directly through the IRS website, check out our free fillable forms page: www.teachmepersonalfinance.com/free-fillable-tax-forms/
I suddenly got a small penalty this year but never ever before in many years of similar income/situation? Why now?
Tax topic 306 covers this in depth. Taxpayers generally can avoid an underpayment penalty if their final tax owed is $1,000 or less when the tax return is filed, if you’ve paid 100% of last years tax bill (110% for high income taxpayers), or 90% of the current year estimated tax. Without knowing the particulars of your tax situation, I imagine that this year, you might have run afoul of one of those guidelines without realizing it.
@@teachmepersonalfinance2169 thank you. My income was slightly higher but I’ve always payed way over $1K and never got a penalty.
I retired in dec. 2022. After doing my taxes I realized I didn't have enough withholdings for 2023. I owe the IRS $1222.00 Can I just enter the waver box A. The instructions for form 2210 lists that a a reason for the waver.
This is correct. You'll need to attach documentation to your Form 2210 as proof of your retirement (and the fact that you were at least age 62 or were disabled when you retired). You should just complete page 1 of the form in this situation.
thanks for the reply. In the past I would always do my federal taxes by mail in. This year I was planning on doing my taxes online through the irs website for free because my AGI is less than 79k. Do you know if the irs online program will handle the 2210 form? Last question, on line 8 on form 2210, is that the amount of taxes I owed for 2022, line 22 of form 1040? That is the only form I did in 2022. What is interesting is I over paid the irs by more than 2500 for my 2022 filing.
@@spearhammer6490 I believe that Form 2210 is one of the fillable forms, as we had created a list page of all of these forms last year: www.teachmepersonalfinance.com/free-fillable-tax-forms/
Once the IRS page opens back up, it should include these forms, as well as additional ones that I believe the IRS is trying to add.
As for Line 8, that does include your Line 22 from the prior year 1040, as well as certain lines from Schedule 2 (links to article and video below for reference, even though it appears you might not need it):
Line 4
Line 8 (additional tax on distributions only)
Lines 9-12
Lines 14-16
Line 17a
Lines 17c-j
Line 17l and
Line 17z
IRS Schedule 2, Additional Taxes
Article: www.teachmepersonalfinance.com/irs-schedule-2-instructions/
Video: th-cam.com/video/Yb_AwqA_sPM/w-d-xo.html
Yes, thank you very much. I did not do a schedule 2 for year 2022 or any year for the matter. This tax system we have here is one complex animal. @@teachmepersonalfinance2169
Are 73 years tax payers who take a RMD or execute a Back Door Roths in November given a waver / exception estimated tax penality?
According to the Form 2210 instructions, there are two situations in which the IRS would grant a waiver, based upon your request on IRS Form 2210:
If you have an underpayment, all or part of the penalty for that underpayment will be waived if the IRS determines that:
• In 2022 or 2023, you retired after reaching age 62 or became disabled, and your underpayment was due to reasonable cause (and not willful neglect); or
• The underpayment was due to a casualty, disaster, or other unusual circumstance, and it would be inequitable to impose the penalty. For federally declared disaster areas, see Federally declared disaster, later.
Generally, the IRS can grant penalty relief for first-time penalty situations that involve a failure-to-file or failure-to-pay penalty (after the tax filing deadline), on IRS Form 843. However, I don't see any reference that allows you to use Form 843 to grant relief for the underpayment (throughout the tax year) penalty.
If you find different guidance from the IRS, please let me know!
IRS Form 843, Claim for Refund and Request for Abatement
Article: www.teachmepersonalfinance.com/irs-form-843-instructions/
Video: th-cam.com/video/beGwgBS1YYI/w-d-xo.html
There is no such thing as Line 12b on form 1040. How are we supposed to follow the instructions for Part 1 line 7?
You're correct. I went back to listen to this video, and couldn't find where I referenced Line 12b on Form 1040. I believe I mention Line 12b for the Form 2210 or for Schedule AI...I was referring to Line 12, column (b), as there are 4 columns for Line 12-(a),(b),(c),(d). Apologize for the confusion.
With regards to Line 7...I'm not sure what you mean. If you subtract the withheld taxes (Line 6) from the current year tax liability (Line 4), and the result is less than $1,000, then you don't need to file Form 2210. If the result is $1,000 or more, then you need to keep going through the form to see if you met the minimum tax payment requirements. Is there something that needs clarification?
@@teachmepersonalfinance2169 I was not talking about you but the instructions for Part 1 line 7
printed by the IRS mentions line 12b of form 1040, but there is no such thing. Are we supposed to make something up to put in there? I watched your video and others hoping for an explanation.
@@bluestormcloud791 I don't see anything in the instructions for Part 1, Line 7 about Line 12b from Form 1040, but I see mention of. Here is what I copied & pasted : If you’re a resident of India and a student or business apprentice, enter your standard deduction from Form 1040-NR, line 12.
Here is a link to the page I got the instructions from: www.irs.gov/pub/irs-pdf/i2210.pdf
@@teachmepersonalfinance2169 7
In each column, enter the sum of your standard deduction and line 12b from Form 1040
@@teachmepersonalfinance2169 From year 2022. Form 2210. Schedule AI Part 1 line 7. "In each column, enter the sum of your standard deduction and line 12b from Form 1040". Anyways, I just ignored it. What else could I do since line 12b does not exist?