Form 2210 Worksheet: 2026 Rates, Schedule AI, and Waivers

The Form 2210 worksheet is how you calculate the underpayment penalty on your federal return and, when the standard method overstates it, how you prove a smaller figure to the IRS. Most filers never need to touch it because the IRS will compute the penalty for you and send a bill. You fill it out yourself when you want to pay less than that default: when your income was uneven and you can annualize it, when you qualify for a waiver, or when the numbers put you outside the safe harbors and you want to control the math.¹

Do You Need to Fill Out the Worksheet

Start with the total tax on your return minus your withholding and refundable credits. If that number is under $1,000, there is no penalty and no worksheet.²

Above $1,000, two safe harbors still let you skip it. You are covered if your payments equal at least 90% of your current-year tax, or at least 100% of the tax shown on your prior-year return, provided that return covered a full 12 months.³⁴ Meeting one is enough.

The prior-year safe harbor tightens for higher earners. If the AGI on last year’s return was over $150,000 ($75,000 if married filing separately), the 100% threshold becomes 110%.⁴ The trigger is the prior year’s AGI, not the current year’s, which is a point people routinely get backwards.⁵

You do need to file the worksheet in three situations: you are using the Annualized Income Installment Method to lower the penalty, you are asking for a waiver, or you are computing a penalty smaller than the IRS’s default calculation.² Letting the IRS run the numbers usually costs more, because its default assumes your income arrived in four equal chunks.

Note that farmers and fishermen do not use this worksheet at all; they file Form 2210-F under a different set of rules.⁶

Working Through Parts I and II

Part I of the worksheet, lines 1 through 9, produces your required annual payment. That number is the smaller of 90% of your current-year tax or 100% of your prior-year tax (110% if you fell into the higher-AGI bracket described above).³ The standard method then splits that required amount into four equal installments of 25% each, tied to the estimated tax deadlines of April 15, June 15, September 15, and the following January 15.⁷ Withholding, unless you can show otherwise, is spread evenly across the four periods.

Part II is where the comparison happens. For each period, the worksheet lines up what you owed against what you actually paid. If you overpaid in one period, that excess carries forward as a credit into the next. The penalty applies only to the shortfall that remains, and only for the days between the installment due date and the day you finally covered the gap (or the return’s original due date, whichever is earlier).

Because payments and shortfalls each have their own start and end dates, the worksheet asks for exact payment dates rather than just totals. That is what makes the arithmetic tedious and what makes it worth doing carefully.

The 2026 Rates the Worksheet Applies

The penalty is not a flat fee. It is interest on the underpaid amount, at a rate the IRS resets every quarter equal to the federal short-term rate plus three percentage points.⁸ Compounding is daily.

For 2026 the announced individual underpayment rates are:

The worksheet uses a separate daily rate factor for each period, so a shortfall on the April 15 installment accrues at whichever rate is in effect for the days it stays unpaid. Q3 and Q4 rates appear on the IRS quarterly interest rates page as they are announced.¹¹

Schedule AI for Uneven Income

Schedule AI is the part of the worksheet that most often saves real money. If your income was front-loaded or back-loaded during the year, the standard equal-quarters assumption charges you a penalty for money you had not yet earned when the earlier installments were due. Schedule AI recalculates each installment against what you had actually earned by that point.²

It is built for freelancers with seasonal income, partners receiving year-end distributions, investors who realized capital gains late, and anyone whose real income profile does not look like four equal slices.

The Four Cumulative Periods

Schedule AI asks for your adjusted gross income, deductions, and credits as of the end of each of four cumulative periods, all starting January 1:²

Period 1: January 1 through March 31
Period 2: January 1 through May 31
Period 3: January 1 through August 31
Period 4: January 1 through December 31

This is where records matter. If you are self-employed, you need net profit figures tied to those specific end dates, not just annual totals.

Annualization Factors

Each period’s income is multiplied by an annualization factor to project a full-year figure:²

Period 1: multiply by 4
Period 2: multiply by 2.4
Period 3: multiply by 1.5
Period 4: multiply by 1

If you earned $10,000 in the first three months because work had not picked up, Period 1 projects an annual income of $40,000 and a small required installment. If you later earned $30,000 in the same period, it projects $120,000 and a much larger one. Regular tax rate schedules apply to the annualized income to produce an estimated full-year tax for that period.

Required Cumulative Percentages

The schedule then applies escalating percentages to determine what you should have paid cumulatively by each due date:

By April 15: 22.5% of the annualized tax for Period 1
By June 15: 45% of the annualized tax for Period 2
By September 15: 67.5% of the annualized tax for Period 3
By January 15: 90% of the annualized tax for Period 4

These percentages line up with the 90% current-year safe harbor. The schedule compares your cumulative payments against these targets and feeds the revised installment amounts back into Part III of Form 2210, which then recalculates the penalty using the smaller period-by-period requirements. For someone who earned most of their income in the last third of the year, the recalculation can reduce the penalty substantially or eliminate it.

To claim this, file the complete Form 2210 including Schedule AI, even if the result is a zero penalty. Without the paperwork, the IRS defaults to the equal-quarters assumption.¹

Waiver Boxes on the Worksheet

Two boxes in Part II let you ask the IRS to waive the penalty in whole or in part.² The tax code allows relief in two situations.⁴

The first is a casualty, disaster, or other unusual circumstance that would make the penalty unfair. A federally declared disaster that destroyed your records, a serious illness during the year, or something similar can qualify. Check Box A for a full waiver or Box B for a partial one, and attach a written statement explaining what happened and how it kept you from paying on time. With Box A, you only file page 1 of Form 2210 and skip the penalty calculation. With Box B, you compute the full penalty and the amount you want waived.

The second is retirement after reaching age 62 or becoming disabled, in either the tax year in question or the year before, where the underpayment was due to reasonable cause and not willful neglect.⁴ The IRS looks for a real change in income pattern that you had a legitimate reason not to catch in time.

Neither waiver is automatic. The IRS reviews your explanation before granting it. If you receive a penalty notice after filing and think you qualify, call the number on the notice to request abatement then.

Attaching the Worksheet to Your Return

If you are accepting the IRS’s default calculation, do not file the worksheet at all. File your return, and the IRS will bill the penalty separately. Attach Form 2210 only when you used Schedule AI, are requesting a waiver, or otherwise computed a penalty smaller than the IRS’s default.¹

Paper filers attach Form 2210, Schedule AI, and any waiver statement to the back of Form 1040, and enter the final penalty figure on the estimated tax penalty line of the 1040. Electronic filers usually see the software handle it once you indicate uneven income or select a waiver reason. Either way, confirm the penalty on the 1040 matches the figure the worksheet produced. A mismatch flags the return for review and delays any refund.

Mistakes That Make the Worksheet Cost More Than It Should

The most expensive mistake is not filing the worksheet when Schedule AI would help. The IRS does not annualize on its own. Skip the form and you get the equal-quarters default, which charges a penalty on income that had not yet been earned when the earlier installments came due.

A close second is applying the 110% threshold to the wrong year’s AGI. The $150,000 test looks at last year’s return. People whose current income spiked sometimes assume they must meet 110% because the current AGI crossed the line, then either overpay estimates all year or worry about a penalty that does not exist.

The third is missing the carryover between periods in Part II. An overpayment in an earlier period reduces an underpayment in a later one, and the worksheet tracks this cumulatively. Miss it and you calculate a penalty on money the IRS already had. Work the periods in order and carry any excess forward before deciding whether you were short.

1
Internal Revenue Service. Instructions for Form 2210
2
Internal Revenue Service. Form 2210 – Underpayment of Estimated Tax by Individuals, Estates, and Trusts
3
Internal Revenue Service. Topic No. 306 – Penalty for Underpayment of Estimated Tax
4
Office of the Law Revision Counsel. 26 USC 6654 – Failure by Individual To Pay Estimated Income Tax
5
Internal Revenue Service. Publication 505 – Tax Withholding and Estimated Tax
6
Internal Revenue Service. About Form 2210-F – Underpayment of Estimated Tax By Farmers and Fishermen
7
Internal Revenue Service. Frequently Asked Questions on Estimated Taxes for Individuals
8
Office of the Law Revision Counsel. 26 USC 6621 – Determination of Rate of Interest
9
Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026
10
Internal Revenue Service. Internal Revenue Bulletin 2026-08
11
Internal Revenue Service. Quarterly Interest Rates