Updated October 28, 2026. Quick answer: Schedule AI on Form 2210 is the annualized income installment method. If your income came unevenly, it lets each estimated tax installment be based on the income you had earned by that point, scaled up to a year, instead of an even quarter of the total. Its line 27 replaces the 25 percent installments on Form 2210 Part III line 10.
What Schedule AI does
The Form 2210 instructions describe it this way: “If your income varied during the year because, for example, you operated your business on a seasonal basis or had a large capital gain late in the year, you may be able to lower or eliminate the amount of one or more required installments by using the annualized income installment method.” The instructions also set one condition: “If you use Schedule AI for any payment due date, you must use it for all payment due dates.” The regular rules and the penalty form are covered at Form 2210.
The four periods and their factors
Each column covers a longer stretch of the year than the one before it. The factors on the form are the 2025 Schedule AI printed numbers.
| Column | Period covered | Annualization amount (lines 2 and 5) | Applicable percentage (line 20) | Prorated social security limit (line 29) |
|---|---|---|---|---|
| (a) | “Period (a) includes items for January 1 through March 31.” | 4 | 22.5% | $44,025 |
| (b) | “Period (b) includes items for January 1 through May 31.” | 2.4 | 45% | $73,375 |
| (c) | “Period (c) includes items for January 1 through August 31.” | 1.5 | 67.5% | $117,400 |
| (d) | “Period (d) includes items for the entire year.” | 1 | 90% | $176,100 |
The factors, recomputed
The annualization amounts are twelve months divided by the months in the period. Three months gives 12 / 3 = 4, five months gives 12 / 5 = 2.4, eight months gives 12 / 8 = 1.5, and twelve months gives 1. The prorated social security limit on line 29 is the full-year limit of $176,100 times the same fraction of the year: $176,100 x 3 / 12 is $44,025 (computed), $176,100 x 5 / 12 is $73,375 (computed), and $176,100 x 8 / 12 is $117,400 (computed). All of these match the form. The applicable percentages are printed on the form and are not derived here.
Part I, line by line
Lines not listed here are totals or small steps in the same flow. Complete lines 22 to 27 of one column before going to line 22 of the next.
| Line | What the form says |
|---|---|
| 1 | “Enter your adjusted gross income for each period.” |
| 3 | “Annualized income. Multiply line 1 by line 2” |
| 4 | “If you itemize, enter itemized deductions for the period shown in each column.” |
| 7 | “In each column, enter the amount of your standard deduction from Form 1040 or 1040-SR.” |
| 9 | “Deduction for qualified business income.” |
| 11 | “Subtract line 10 from line 3” |
| 14 | “Figure your tax on the amount on line 13.” |
| 17 | “Total tax. Add lines 14, 15, and 16” |
| 19 | “Subtract line 18 from line 17. If zero or less, enter -0-” |
| 21 | “Multiply line 19 by line 20” |
| 22 | “Enter the total of the amounts in all previous columns of line 27” |
| 23 | “Subtract line 22 from line 21. If zero or less, enter -0-” |
| 24 | “Enter 25% (0.25) of line 9 on page 1 of Form 2210 in each column” |
| 25 | “Subtract line 27 of the previous column from line 26 of that column” |
| 26 | “Add lines 24 and 25” |
| 27 | “Enter the smaller of line 23 or line 26 here and on Form 2210, Part III, line 10” |
Part II: annualized self-employment tax
| Line | What the form says |
|---|---|
| 28 | “Net earnings from self-employment for the period” |
| 29 | “Prorated social security tax limit” |
| 31 | “Subtract line 30 from line 29. If zero or less, enter -0-” |
| 33 | “Multiply line 32 by the smaller of line 28 or line 31” |
| 35 | “Multiply line 28 by line 34” |
| 36 | “Add lines 33 and 35.” “Enter here and on line 15 above” |
A worked example
Illustration, not an IRS example. A seasonal business earns most of its income early in the year.
| Item | Illustration |
|---|---|
| Column (a), line 1: income from January 1 through March 31 (invented) | $20,000 |
| Column (a), line 3, computed: line 1 x 4 | $80,000 (computed) |
| Column (b), line 1: income from January 1 through May 31 (invented) | $55,000 |
| Column (b), line 3, computed: line 1 x 2.4 | $132,000 (computed) |
| Column (a), line 19: tax after credits on the annualized income (invented) | $10,000 |
| Column (a), line 21, computed: line 19 x 22.5% | $2,250 (computed) |
Column (a) says the business was running at an $80,000 yearly pace in the first quarter, and column (b) at $132,000 after five months. Line 21 then takes 22.5 percent of the first-column tax as the amount due by the first installment date, and later lines compare that with the regular installment.
Filing it
The instructions list the steps, among them “Check box C in Part II.” and “Attach Form 2210, Parts I, II, III, and Schedule AI to your return.” Estates and trusts use different annualization amounts; the instructions give them.
Edition
This page reads the Instructions for Form 2210 (2025) and the 2025 Form 2210, the file irs.gov served on 2026-10-28 (sha256 in the kit data). It covers the 2025 return, filed in 2026. Check the tax year printed on the worksheet in your own copy and use that year’s line numbers and dollar amounts, because a different year’s worksheet can word its lines differently.
Common mistakes
- Using Schedule AI for one installment and the regular method for the others. The instructions require one method for all due dates.
- Treating each period as separate. The instructions say each period includes amounts from the previous periods.
- Forgetting Part II when you are self-employed. Line 36 feeds line 15 above.
Related: Form 2210, Form 1040 line 38, quarterly estimated taxes for the self-employed, and the Form 1040-ES estimated tax worksheet.
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Answer againSources
- Instructions for Form 2210 (2025): https://www.irs.gov/pub/irs-pdf/i2210.pdf
- Form 2210 (2025), Underpayment of Estimated Tax by Individuals, Estates, and Trusts: https://www.irs.gov/pub/irs-pdf/f2210.pdf
Read from the IRS documents linked above on October 28, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.