How to fill out Form 2210 Schedule AI

Schedule AI is the page of Form 2210 that figures the annualized income installment method. It sizes each required installment to the income you had by March 31, May 31, August 31, and December 31, instead of a flat quarter of the year's tax. When most of the income arrived late, the early installments shrink and the penalty on them can drop to zero. This page walks the schedule line by line, then works a full example.

What Schedule AI does and when it helps

Form 2210 on its own assumes one quarter of the required annual payment was due at each deadline and charges a penalty wherever a payment fell short of that. Schedule AI replaces the assumption with your numbers. For each cutoff date, the annualized income method takes the income you had so far, multiplies it out to a full year, figures the tax on that projection, and asks for a set percentage of it.

It helps when income arrived late. A consultant who signed her largest contract in September, an owner who sold the business in December, an employee whose stock vested in the fourth quarter. Their tax through April was small, and the flat quarter billed them for more than the law required.

It cannot hurt. Line 27 caps each installment at line 26, which is a flat quarter of the required annual payment plus whatever the earlier columns left unused, so a column never asks for more than the regular method would. When income was even or front-loaded, the schedule produces the same installments as the regular method and the extra page changes nothing. It is also all or nothing. Using it for one due date means using it for all four.

The four periods and the factors

Schedule AI has four columns. Each period starts on January 1 and ends on a cutoff date, so every column is cumulative. Column (b) contains everything in column (a) plus April and May, and column (d) is the whole year.

The factor is twelve divided by the months in the period. Three months of income times 4 is a year, and five months times 2.4 is a year. The cutoff dates are not the payment dates. The column ending May 31 is paid June 15, the column ending August 31 is paid September 15, and the column ending December 31 is paid January 15.

Part I, line by line

Fill each line four times, once per column, and finish a column before starting the next.

• Line 1. Adjusted gross income for the period, which is total income through the cutoff date minus adjustments through the same date. Include the deductible half of the period's self-employment tax as an adjustment.
• Lines 2 and 3. The factor from the table, then line 1 times line 2. Line 3 is annualized AGI.
• Lines 4 through 8. Itemized deductions paid in the period on line 4, the same factor on line 5, and the product on line 6. Line 7 is your full standard deduction from Form 1040, the same amount in every column. Line 8 is the larger of lines 6 and 7.
• Lines 9 and 10. The qualified business income deduction figured on the annualized amounts, then line 8 plus line 9.
• Lines 11 through 13. Line 3 minus line 10. Line 12 is zero for Form 1040 filers. Line 13 is annualized taxable income.
• Line 14. The tax on line 13, from the tax table, or from the Qualified Dividends and Capital Gain Tax Worksheet when the period had qualified dividends or long-term gains.
• Line 15. Self-employment tax from line 36 of Part II.
• Lines 16 and 17. Other taxes owed because of events in the months the column covers, including Additional Medicare Tax and net investment income tax. Line 17 adds lines 14, 15, and 16.
• Lines 18 and 19. Credits earned in the period, then line 17 minus line 18.
• Lines 20 and 21. The applicable percentage from the table, then line 19 times it. Line 21 is the cumulative amount due by that column's payment date.
• Lines 22 and 23. Line 22 is the sum of line 27 from every earlier column. Line 23 is line 21 minus line 22, the part of the cumulative amount not yet required.
• Lines 24 through 26. Line 24 is 25% of the required annual payment from Form 2210, Part I, line 9. Line 25 is the previous column's line 26 minus its line 27, the share that column did not use. Line 26 adds them.
• Line 27. The smaller of line 23 or line 26. This is the required installment.

Line 27 from each column goes to Form 2210, Part III, line 10, and you check box C in Part II. The Form 2210 walkthrough covers the rest of the form.

Part II, self-employment tax by period

Part II annualizes self-employment tax with factors printed on the form, so there is no separate multiplication by line 2. Line 28 is net profit for the period times 92.35%. Line 29 is the Social Security wage base prorated to the period, printed as $44,025, $73,375, $117,400, and $176,100. Line 30 is wages already subject to Social Security tax in the period, and line 31 is line 29 minus line 30.

Line 33 multiplies the smaller of line 28 or line 31 by the line 32 factor, printed as 0.496, 0.2976, 0.186, and 0.124. Each is the 12.4% Social Security rate times the column's annualization factor. Line 35 multiplies line 28 by the line 34 factor, 0.116, 0.0696, 0.0435, and 0.029, which is the 2.9% Medicare rate built the same way. Line 36 adds lines 33 and 35 and goes to line 15 of Part I. Use the printed figures. The wage limit is prorated, not annualized, so scaling a full-year Schedule SE gives a different answer.

A worked example

A single consultant earns $150,000 of net profit in 2025, most of it late. Profit through March 31 was $10,000, through May 31 $20,000, through August 31 $45,000, and for the year $150,000. She has no withholding, and her 2024 tax was higher than this year's, so the required annual payment is 90% of her 2025 total tax of $37,871, which is $34,084. The regular method puts $8,521 on each of the four due dates.

Column (b) shows what the schedule does instead. Profit of $20,000 through May 31 times 2.4 is $48,000. Subtracting the deductible half of self-employment tax leaves annualized AGI of $44,609. After the $15,750 standard deduction and a $5,772 qualified business income deduction, line 13 is $23,087. Tax on that is $2,532. Self-employment tax from Part II is $6,782. Line 19 is $9,314, and 45% of it is $4,191, the cumulative amount due by June 15. Column (a) already required $1,681, so line 23 is $2,510. Line 26 is larger, so $2,510 is the second installment.

The four required installments are $1,681, $2,510, $5,130, and $24,763. They still add to $34,084. The schedule moves the bill to January, where the income was, and forgives nothing. Paying $2,200 in April and $2,200 in June now covers the first two installments in full, so the penalty on them is zero. Under the regular method the same two payments were each $6,321 short.

Common mistakes

• Entering the quarter's income instead of cumulative income. Column (c) is January through August, not June through August.
• Leaving box C unchecked. Part III, line 10 takes the Schedule AI figures only when box C applies. Otherwise it takes a flat 25% of line 9.
• Annualizing the standard deduction. Line 7 is the full amount in every column. Only line 4 gets multiplied.
• Expecting withholding to follow the income. Form 2210 treats withholding as paid in four equal parts on the due dates unless you check box D and use the dates it was withheld.

Sources: Form 2210 instructions · Publication 505