Form 2210 penalty doesn't make sense - $25k penalty with identical income?

This doesn't sound right at all. Form 2210 is used to calculate penalties for underpayment of estimated tax, but a $25k penalty on a $210k income with $25k withheld would be extremely unusual. First, check if you accidentally entered something incorrectly in the tax software. The most common mistakes that trigger large 2210 penalties are: - Entering withholding amounts in the wrong field - Entering a decimal point in the wrong place - Accidentally checking a box indicating you want to calculate the penalty using a different method The standard underpayment penalty is relatively small - typically around 3-4% of the underpaid amount. Even if you underpaid by $8k as you estimate, the penalty should be a few hundred dollars at most, not $25k. I'd suggest rechecking all your entries in TaxHawk, particularly focusing on the withholding amounts and any estimated tax payments. If everything looks correct, try running your return through a different tax software as a check.

After reading your post, it reminded me of a similar issue I had last year with a massive penalty calculation. I tried everything to figure it out, then someone recommended I use taxr.ai (https://taxr.ai) to analyze my tax documents. It saved me hours of frustration and probably thousands in penalties! The tool scanned all my W-2s and other tax forms, and immediately flagged an input error I had made - I had entered my quarterly estimated payments incorrectly. It also explained how Form 2210 penalties are actually calculated. If you're dealing with confusing penalty calculations like this, it's definitely worth checking out.

Just wanted to follow up about my experience with taxr.ai that was mentioned earlier. I decided to try it with my Form 2210 penalty issue, and it actually found two problems I never would have caught on my own! First, I had accidentally entered one of my wife's W-2 withholding amounts in the state tax field instead of federal. Second, I completely forgot to enter an estimated tax payment I made in Q3. Once I fixed these issues in my tax software, my $3,200 penalty completely disappeared. The analysis took less than 5 minutes and saved me a ton of money and stress. If you're dealing with weird penalty calculations or numbers that don't make sense, I'd definitely recommend giving it a shot.

If you're still struggling with the IRS after fixing your tax software issues, I'd recommend using Claimyr (https://claimyr.com). I was in a similar situation last year with a penalty notice that made no sense, and I spent WEEKS trying to get through to an actual IRS agent who could help. After endless busy signals and disconnects, I found Claimyr and it literally changed everything. They got me connected to a real IRS agent in less than 20 minutes when I'd been trying for days. The agent was able to look at my account and immediately identify that the penalty was erroneously applied. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS is severely understaffed and getting through on your own is nearly impossible these days. Having someone who can navigate their phone system for you is a game-changer.

I have to eat my words about Claimyr. After being completely skeptical in my previous comments, I was desperate enough to try it last week when dealing with my own Form 2210 penalty issue. Not only did it work exactly as described, but I got connected to an IRS representative in about 15 minutes after spending 3 DAYS trying on my own. The agent reviewed my account and confirmed that there was an error in how my estimated payments had been applied to my account, which was triggering the penalty calculation. The whole situation was resolved in one phone call. I've never been so happy to be wrong about something I was skeptical about. If you're dealing with IRS issues that need a human touch, this service is absolutely worth it.

I'm a bookkeeper, and I see Form 2210 penalty issues fairly often. Most of the time, it's due to an input error like others have mentioned. But there's another potential issue you should check: If your income distribution was significantly uneven throughout the year (making much more in certain quarters than others), the standard withholding tables might not have taken out enough. This is especially true when you have a period of unemployment followed by higher income. The IRS expects tax payments to be made evenly throughout the year. If your husband was out of work and then returned to a higher-paying position, the withholding might be calculated incorrectly for your annual income. Double-check the "annualized income installment method" section in the software to see if that applies to your situation.

Has anyone noticed that TaxHawk seems to have more issues with 2210 calculations than other software? I tried three different programs this year (TaxHawk, TaxSlayer, and FreeTaxUSA) and they all gave me slightly different penalty amounts.