Tax question - IRS rejecting returns with form 2210 underpayment of estimated tax form (1 Viewer)

[OrganizedChaos]

My wife and I are now retired so our income varies greatly during the year (mostly social security, capital gains, dividends, sale of some securities and at end of the year the biggie - 401K withdrawal as we start trying to draw down 401K/IRA before we get to RMDs in our later years). So we pay estimated quarterly taxes with Q4 being huge (depending on how much we decide to withdraw from 401K in November/December).

We have been using Block Advisors for years to do our taxes. I have been wanting to move away from them and this may finally be the reason to do so.

I actually paid too much in estimated taxes in Q4 so we got refunds from both the Federal and CA.

I provided Block Advisors the data they needed to fill out form 2210 and the annualized income installment (AII) method section since it needs it by quarter and they would not have that information. They however said the IRS rejected the 1040 submission until they removed form 2210 (supposedly no specific reason given why it was rejected).

So both the IRS and CA (FTB) assessed underpayment penalties and reduced the refunds we were getting (total of over $700 so not pocket change). Now it looks like I have to submit form 2210 myself along with a signed statement that its correct. Assuming I will have to try and get the IRS settled first and then deal with CA (in case the IRS pushes back on form 2210).

Block Advisors did file the form 2210 for me in 2022 (although that year I did owe a slight penalty).

Anyone experienced with taxes believe the Block Advisors argument that IRS won't allow it to be submitted and thus now its my job to deal with it? Perhaps the IRS changed their rules but we checked the box about income varied during the year and thus should be able to file the form. Not looking forward with the IRS staffing cuts sending in paperwork (vs. being filed electronically) and waiting for that to be resolved.

I have been using freetaxusa.com for the last few years to try and get a handle on my upcoming taxes as the year goes along. May actually move to start using them to actually file my taxes (significantly cheaper than Block).

 

[Nick Vermeil]

Look at me! I paid taxes!

 

[OrganizedChaos]

Look at me! I paid taxes!

Well as much I would like to keep that money I am not about to tempt fate by not doing it.

 

[Pipes]

I’m 99% sure you can efile a return with the 2210. Guessing they filled out something on the form wrong which is causing the error. Every software is different so I couldn’t begin to tell you what that error is

 

[fatness]

Anyone experienced with taxes believe the Block Advisors argument that IRS won't allow it to be submitted and thus now its my job to deal with it? Perhaps the IRS changed their rules but we checked the box about income varied during the year and thus should be able to file the form. Not looking forward with the IRS staffing cuts sending in paperwork (vs. being filed electronically) and waiting for that to be resolved.

I only have experience as a taxpayer (relying on an accountant) and know nothing about Block Advisors. The government plans to cut the IRS workforce by 20% by May 15, and there's a further government idea to keep cutting until 50% of employees are gone. The plan is to rely more on AI and less on people, and to provide more manpower toward processing online filings and less manpower on paper filings. And there's a plan to allow fewer things to be filed online. Coupled with increased wait times to talk to a real person, it's going to get tougher.

I hope you can get through this online before these changes make it tougher for you.

 

[OrganizedChaos]

I’m 99% sure you can efile a return with the 2210. Guessing they filled out something on the form wrong which is causing the error. Every software is different so I couldn’t begin to tell you what that error is

I am thinking the same thing but they seem to be stating that the IRS is not accepting form 2210's this year. Have to wait until you get a notification of a penalty and then file it. That may be true but I doubt it. The wording that goes with form 2210 seems to imply in my situation I must file it.

 

[OrganizedChaos]

Anyone experienced with taxes believe the Block Advisors argument that IRS won't allow it to be submitted and thus now its my job to deal with it? Perhaps the IRS changed their rules but we checked the box about income varied during the year and thus should be able to file the form. Not looking forward with the IRS staffing cuts sending in paperwork (vs. being filed electronically) and waiting for that to be resolved.

I only have experience as a taxpayer (relying on an accountant) and know nothing about Block Advisors. The government plans to cut the IRS workforce by 20% by May 15, and there's a further government idea to keep cutting until 50% of employees are gone. The plan is to rely more on AI and less on people, and to provide more manpower toward processing online filings and less manpower on paper filings. And there's a plan to allow fewer things to be filed online. Coupled with increased wait times to talk to a real person, it's going to get tougher.

I hope you can get through this online before these changes make it tougher for you.

Yea I am aware its getting worse which concerns me for this year and going forward. Now this year I have to send in paper forms and wait for a resolution. It concerns me that I will be dealing with this every year going forward with a much smaller IRS staff. We got 75+ percent of our income in Q4 and that was discretionary as we could decide how much we were willing to pull out of a 401K. Each quarter we proportionally paid our estimated taxes based on our income to date and projected income for the year. I sure don't want to start paying a lot more estimated taxes early because we could always decide to forego the end of year 401K withdrawal and then would have vastly overpaid taxes in the interim.

 

[rockaction]

The plan is to rely more on AI and less on people, and to provide more manpower toward processing online filings and less manpower on paper filings. And there's a plan to allow fewer things to be filed online

Seems utterly contradictory. Is the AI scanning the paper filings then? My father was a partner in an accounting firm and I worked for it for a time, so this is all interesting. I'm a bit familiar with all of this. I'd imagine you'd want humans looking at the paper filings while AI looked at the e-file returns, which tend to be easier ones to process. Unless AI gets really outstanding and then you want it to pick up the tax cheats using specified algorithms (David Foster Wallace's The Pale King was supposed to be all about the IRS, algorithms, and what happens when the IRS is run like a business instead of a government entity . . . I mean, talk about a prescient author), but we're probably a decent way off from that. Unless we're not and I'm just unaware of it.

Either way, OrganizedChaos is right to be concerned about estimates. Even when the IRS is fully staffed and the accounting firms really work with the clients to create correct estimates and to pay them on time, it was the part of processing returns that inevitably got bollocksed up the most. I can remember those penalties clear as a bell (explaining to the client what the penalties were all about if they hadn't made or paid estimates because of a miscommunication with our firm, trying to get the quarterly amounts right when prepping the return itself, all that stuff). I did not prepare complicated returns and this was twenty years ago, so I have no idea what to do in your situation, OrganizedChaos. Best of luck.

 

[Phil Elliott]

Used that form last year and will be using it this year again. Taxes prepared-just waiting another week to file. Had a NQSP lump sum payment (over 3years) and I was able to minimize penalty (from $900 down to under $20) by spreading income evenly over 4 quarters. HR Block pc software.

 

[OrganizedChaos]

Used that form last year and will be using it this year again. Taxes prepared-just waiting another week to file. Had a NQSP lump sum payment (over 3years) and I was able to minimize penalty (from $900 down to under $20) by spreading income evenly over 4 quarters. HR Block pc software.

I have reached out now to H&R Block/Block Advisors support on Twitter/X. They asked to take it offline with DM so we'll see what they say. I still believe there was some issue with the form they needed to correct. The local office manager claims the IRS won't accept them this year which I think is a load of crap. They just did not care or know how to resolve the response they were getting back when they submitted it electronically. Since you are using their software to submit it yourself I will definitely be interested in how that goes for you.

 

[fatness]

The plan is to rely more on AI and less on people, and to provide more manpower toward processing online filings and less manpower on paper filings. And there's a plan to allow fewer things to be filed online

Seems utterly contradictory. Is the AI scanning the paper filings then?

Seems contradictory to me, too. The articles I read did not explain the plan any further than I did. I am not at all sure there is a plan at this point. It appears to be cut first, then figure out how to make some things work with what's left. One thing several articles mentioned is that high-dollar tax investigations/disputes take vastly more man-hours than do low-dollar ones, and that the high-dollar ones are likely to just be dropped.

 

[OrganizedChaos]

I also created a thread on reddit to collect input from anyone who was able to file that form. Someone mentioned they used TurboTax and filed the form with schedule AI which is exactly what I was trying to have done. BlockAdvisors support did create a case and said I will hear within 5 days.

 

[fatness]

BlockAdvisors support did create a case and said I will hear within 5 days.

Good that you had Block Advisors do that.

 

[OrganizedChaos]

Used that form last year and will be using it this year again. Taxes prepared-just waiting another week to file. Had a NQSP lump sum payment (over 3years) and I was able to minimize penalty (from $900 down to under $20) by spreading income evenly over 4 quarters. HR Block pc software.

Hi can you let me know if you submitted that form with the HR Block software? I created a case with HR Block support and they will not state whether their software supports it or not. They just say I need to contact the IRS. I expected I would be doing it myself anyway but I am pissed that their original answers were they had no idea why it was being rejected, then the IRS is not allowing the form to be submitted at all this year, and now the only recourse is to contact the iRS to speak with someone (like that is doable). I have the form ready to go already and will submit it this weekend but time to go scorched earth anywhere I can place H&R Block reviews (and this is the last year I use them). Ultimately they should have been able to figure out why it was being rejected and fix the issue and resubmit it.

 

[OrganizedChaos]

Well, while manually creating my 2210 form to send to the IRS I figured out why they rejected Block Advisor's return. They put in a Q4 AGI on the 2210 form which did not match the 1040. That would be rejected every time. Stunned their software allowed them to enter it. freetaxusa autofills it won't even let me enter the Q4 AGI but makes me enter the other 3 quarters (as expected).

 

[Phil Elliott]

Used that form last year and will be using it this year again. Taxes prepared-just waiting another week to file. Had a NQSP lump sum payment (over 3years) and I was able to minimize penalty (from $900 down to under $20) by spreading income evenly over 4 quarters. HR Block pc software.

Hi can you let me know if you submitted that form with the HR Block software? I created a case with HR Block support and they will not state whether their software supports it or not. They just say I need to contact the IRS. I expected I would be doing it myself anyway but I am pissed that their original answers were they had no idea why it was being rejected, then the IRS is not allowing the form to be submitted at all this year, and now the only recourse is to contact the iRS to speak with someone (like that is doable). I have the form ready to go already and will submit it this weekend but time to go scorched earth anywhere I can place H&R Block reviews (and this is the last year I use them). Ultimately they should have been able to figure out why it was being rejected and fix the issue and resubmit it.

I will be submitting my taxes early next week and will confirm if they accept the form.

 

[OrganizedChaos]

A question for anyone who may know. I have my form 2210 ready to send in to the IRS but the letter they sent me states to send it to the address at the top of the notice.

The top of it lists:

Department of Treasury
Internal Revenue Service
Fresno, CA.....


There is no street address or PO box. Does that seem correct? Don't recall ever seeing an address without one or the other. Was going to be sending it certified mail

 

[Phil Elliott]

Used that form last year and will be using it this year again. Taxes prepared-just waiting another week to file. Had a NQSP lump sum payment (over 3years) and I was able to minimize penalty (from $900 down to under $20) by spreading income evenly over 4 quarters. HR Block pc software.

Hi can you let me know if you submitted that form with the HR Block software? I created a case with HR Block support and they will not state whether their software supports it or not. They just say I need to contact the IRS. I expected I would be doing it myself anyway but I am pissed that their original answers were they had no idea why it was being rejected, then the IRS is not allowing the form to be submitted at all this year, and now the only recourse is to contact the iRS to speak with someone (like that is doable). I have the form ready to go already and will submit it this weekend but time to go scorched earth anywhere I can place H&R Block reviews (and this is the last year I use them). Ultimately they should have been able to figure out why it was being rejected and fix the issue and resubmit it.

I will be submitting my taxes early next week and will confirm if they accept the form.

Taxes completed and transmitted today. No issues with Form 2210. Awaiting official "IRS acceptance" of return.
ETA: Taxes "accepted" by IRS.

 

[Phil Elliott]

A question for anyone who may know. I have my form 2210 ready to send in to the IRS but the letter they sent me states to send it to the address at the top of the notice.

The top of it lists:

Department of Treasury
Internal Revenue Service
Fresno, CA.....


There is no street address or PO box. Does that seem correct? Don't recall ever seeing an address without one or the other. Was going to be sending it certified mail

My guess is they want it sent to the local regional office.

 

[OrganizedChaos]

Used that form last year and will be using it this year again. Taxes prepared-just waiting another week to file. Had a NQSP lump sum payment (over 3years) and I was able to minimize penalty (from $900 down to under $20) by spreading income evenly over 4 quarters. HR Block pc software.

Hi can you let me know if you submitted that form with the HR Block software? I created a case with HR Block support and they will not state whether their software supports it or not. They just say I need to contact the IRS. I expected I would be doing it myself anyway but I am pissed that their original answers were they had no idea why it was being rejected, then the IRS is not allowing the form to be submitted at all this year, and now the only recourse is to contact the iRS to speak with someone (like that is doable). I have the form ready to go already and will submit it this weekend but time to go scorched earth anywhere I can place H&R Block reviews (and this is the last year I use them). Ultimately they should have been able to figure out why it was being rejected and fix the issue and resubmit it.

I will be submitting my taxes early next week and will confirm if they accept the form.

Taxes completed and transmitted today. No issues with Form 2210. Awaiting official "IRS acceptance" of return.
ETA: Taxes "accepted" by IRS.

Thanks for the feedback. Block Advisors changed their tune multiple times as to what happened (was not accepting mine, not accepting any form 2210s, then they never actually rejected mine they would not let them submit it, etc.). Basically they screwed it up and will never admit it. They have left it to me on my own to deal with the IRS. I sent in the form 2210 today.

It was even worse than I originally thought. Besides having the 4th quarter AGI wrong which needed to match my return, they also had higher AGI numbers in the 2nd and 3rd quarter than I had given them so even if accepted I would have likely been hit with a smaller penalty.

I also uncovered yesterday that California has their own form (5805) that I need to use to reduce their penalty. Amazing, Block Advisors never mentioned that form. So I am working on that one now.

 

[OrganizedChaos]

A question for anyone who may know. I have my form 2210 ready to send in to the IRS but the letter they sent me states to send it to the address at the top of the notice.

The top of it lists:

Department of Treasury
Internal Revenue Service
Fresno, CA.....


There is no street address or PO box. Does that seem correct? Don't recall ever seeing an address without one or the other. Was going to be sending it certified mail

My guess is they want it sent to the local regional office.

No issue with the regional office. I just expected a PO box or a street address listed. However, that is what is on their form and online research showed others to be giving that as the same address to send the form. I sent it in today via certified mail. I appreciate your feedback along with everyone else.

This has been an eye opening experience for sure. May just change to using freetaxusa.com going forward for my taxes or may look for a CPA.

 

[GroveDiesel]

Not happy with the HR Block software at all. I had a refund from federal and a pretty good sized payment owed for state. Wasn’t a total surprise since my wife’s state pension disability payments are nontaxable by the feds but taxable in NJ, but I thought I had made adjustments to my own state withholding to make up for it.

Instead of digging further into it, e-filed and paid the payment this afternoon before getting more curious and looking into it. Turns out that for some reason, H&R Block’s software was including my wife’s disability pension payments on her 1099-R both under wages AND under retirement payments (where it should be). And the only way to make the adjustment was to manually go in and reduce the wage amount. So it doubled her income.

So now I have to wait until the return is accepted and then refile and wait for them to send me the money back that I just sent them.

 

[OrganizedChaos]

Not happy with the HR Block software at all. I had a refund from federal and a pretty good sized payment owed for state. Wasn’t a total surprise since my wife’s state pension disability payments are nontaxable by the feds but taxable in NJ, but I thought I had made adjustments to my own state withholding to make up for it.

Instead of digging further into it, e-filed and paid the payment this afternoon before getting more curious and looking into it. Turns out that for some reason, H&R Block’s software was including my wife’s disability pension payments on her 1099-R both under wages AND under retirement payments (where it should be). And the only way to make the adjustment was to manually go in and reduce the wage amount. So it doubled her income.

So now I have to wait until the return is accepted and then refile and wait for them to send me the money back that I just sent them.

Sorry to hear it. I may look into Turbo Tax next year myself.