The IRS expects all taxpayers to follow a “pay-as-you-go” model. If you owe more than $1,000 at tax time and haven’t made sufficient estimated payments throughout the year, you could face an underpayment penalty. This article explains how to avoid that penalty—using tools like Zoho Expense for accurate recordkeeping and IRS Form 2210 for compliance.
If you receive income without tax withholding—like self-employment, rental, or investment income—you must pay estimated taxes quarterly. If you fall short, the IRS charges a penalty (like interest) based on how much you underpaid each quarter.
The IRS offers two “safe harbor” thresholds. You won’t owe a penalty if you:
To make accurate estimated payments, you need a clear view of your income and deductions:
All of this is easy with Zoho Expense, which keeps you audit-ready and IRS-compliant year-round.
Use Form 2210 to calculate your underpayment penalty, request a waiver due to hardship, or show that your payments were made evenly. Zoho Books + Zoho Expense can generate the reports you need to support this form.
Have questions about your penalty risk or want a review of your Zoho Expense setup? Email us here.
Updated with 2025 tax rules. Provided by Gbooks Solutions.