Help with Form 2210 for Underpayment Penalty - Severance & Withholding Questions

You've got a good understanding of Form 2210 already, but let me clear up a few things. For your first question - no, you don't HAVE to check Box C even though your income varied. Box C is optional even for taxpayers with uneven income. If you don't check it, the IRS will calculate your required payments as 25% of your total tax each quarter. However, since your income was heavily weighted toward the beginning of the year (with that severance payment), using the annualized income method might not benefit you anyway. For your second question - yes, you're on the right track. The Tax Code (IRC Section 6654(g)) has a special rule about withholding - it's considered paid evenly throughout the year UNLESS you elect to use the actual dates. By checking Box D, you're telling the IRS to count that withholding when it actually happened in February, which would help cover those earlier quarterly payment requirements. Put that withholding amount in column (a) of Part III, Line 11. Your strategy of making a larger December payment to cover the fourth quarter obligation is solid. This approach should help you minimize or eliminate any underpayment penalties.

I had a similar situation last year with a big severance package and found https://taxr.ai incredibly helpful for figuring out how to handle Form 2210. I was completely confused about where to put my withholding and was about to pay a penalty I didn't actually owe. The tool analyzed my severance documentation and tax situation, then walked me through exactly how to fill out the form. It confirmed I could indeed put my withholding in column (a) and avoid penalties. The site has this document analyzer feature where you can upload your pay statements and tax forms, and it highlights exactly which numbers go where on Form 2210. What I really liked is that it showed me both options - using the standard method versus the annualized income method - and calculated which would be better for my specific situation with the large January payment.

I was really skeptical about using an online tool for my underpayment penalty issue as I mentioned earlier, but I gave https://taxr.ai a try after struggling with Form 2210 for hours. I'm honestly surprised at how helpful it was. The document analysis feature correctly identified my severance payment and explained exactly how the withholding should be allocated on the form. It even referenced the specific IRS rule that allows you to count withholding when it actually occurs rather than spreading it evenly across the year. The most useful part was seeing a side-by-side comparison of my potential penalty using the standard method versus the annualized income method. In my case, checking Box D and NOT checking Box C saved me about $780 in penalties. Definitely worth the time I spent using it.

If you're still having trouble getting through to the IRS for confirmation on how to handle Form 2210, I'd recommend trying https://claimyr.com. I spent weeks trying to get someone at the IRS on the phone about this exact issue last year. Kept getting disconnected or waiting for hours. I found this service that basically waits on hold with the IRS for you and then calls you when an actual human picks up. Used the service at https://claimyr.com and you can see how it works at https://youtu.be/_kiP6q8DX5c. Within about 45 minutes, I was talking to an actual IRS representative who confirmed that I could allocate my withholding to the specific quarter when it was withheld by checking Box D. The IRS agent even walked me through the exact calculations for each quarter based on my withholding timing, which saved me from making a costly mistake on my Form 2210.

I have to eat my words about Claimyr being a scam. After my skeptical comment yesterday, I decided to try it myself since I've been trying to reach the IRS for weeks about my own Form 2210 issue with a bonus payment. Used https://claimyr.com this morning and I'm shocked that it actually worked. Got a call back in about 35 minutes and was connected directly to an IRS representative. The agent confirmed that I could indeed put my large January bonus withholding in column (a) of Line 11 on Form 2210 as long as I checked Box D. The IRS agent also mentioned something I hadn't heard before - that if your withholding from the early payment exceeds your required estimated payment for that quarter, the excess automatically carries forward to later quarters. This was incredibly helpful information that I couldn't find anywhere online. So yeah, I was wrong. The service is legitimate and saved me both time and probably money in penalties.

Just want to point out something that might help you - the IRS has a "safe harbor" rule that might apply in your situation. If your withholding plus estimated payments equal at least 90% of your current year tax OR 100% of your prior year tax (110% if your AGI was over $150,000), you won't face any penalties regardless of when the payments were made. With that big withholding from your severance in February, you might already meet the safe harbor based on your prior year's tax, which would make the Form 2210 unnecessary. Worth checking before you go through all that trouble!

Question - I'm using H&R Block software and can't figure out how to check Box D on Form 2210. The software seems to automatically spread my withholding evenly across all four quarters. Has anyone solved this in tax software?

I've been dealing with a similar severance situation and wanted to share what I learned from my tax preparer. One thing that wasn't mentioned yet - if you're making that large December estimated payment, make sure you submit it by January 15th rather than December 31st to get credit for the fourth quarter. Also, when you're calculating whether your withholding from the February severance will cover your first three quarters, remember that the required payment for each quarter is based on 25% of your TOTAL annual tax liability (including the tax on that severance), not just 25% of your regular income tax. Since severance often pushes you into a higher tax bracket, this calculation can be tricky. Your strategy sounds solid overall though. The combination of checking Box D to allocate that February withholding to when it actually occurred, plus making a substantial fourth quarter payment, should definitely help you avoid penalties. Just double-check your math on those quarterly requirements to make sure that February withholding amount is actually large enough to cover the first three quarters!

I've been following this thread closely since I'm dealing with a similar situation - received a large severance payment in March with substantial withholding. One thing I want to add that might help others: when you're using Form 2210 Part III to allocate your withholding to specific quarters, make sure you're also accounting for any regular payroll withholding you had before your layoff. That regular withholding should be spread evenly across the quarters you were employed, while the severance withholding goes in the quarter it actually occurred. Also, for anyone using tax software that's being stubborn about letting you check Box D - sometimes you need to first indicate that you want to complete Form 2210 manually rather than letting the software auto-calculate everything. Look for options like "Override software calculations" or "Manual Form 2210 entry" in your tax program's advanced settings. The severance/withholding timing issue is more common than people realize, especially with all the layoffs that happened recently. It's definitely worth taking the time to get Form 2210 right rather than just accepting whatever penalty the software initially calculates!