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This article applies to:

  • Product: ONESOURCE Trust Tax

The Estimate and Underpayment Category

The options in the
Estimate and Underpayment
 category (referred to as Estimates and Underpayment options) control how federal and state estimate amounts and underpayment penalties are computed. Estimate and Underpayment options can be set at the SuperBank, PAN, bulk override and account override levels. The Estimate and Underpayment options include:
Option
Description
Option upon which federal estimate is to be based (Form 1041-ES)
This option determines how estimated taxes are calculated for Form 1041-ES. The selections include:
  • Current year tax liability (safe harbor estimate)
    -The safe harbor estimate is calculated at the time the tax return is processed. 1041-ES vouchers are printed. This is the default.
  • Safe harbor estimate, no vouchers printed and no amounts show on diagnostic page
    -The safe harbor estimate is calculated at the time the tax return is processed. 1041-ES vouchers are not printed, and no amounts show on the Diagnostic page of the tax return.
  • Safe harbor estimate, no vouchers printed but amounts show on diagnostic page
    -The safe harbor estimate is calculated at the time the tax return is processed. 1041-ES vouchers are not printed, but amounts show on the Diagnostic page of the tax return.
  • No estimate computed or printed
    -The
    Application of federal overpayment of tax (Form 1041-ES)
     option is ignored and no overpayment is applied.
  • Estimates with only "alphabetic" information
    -No amounts print on Form 1041-ES. Only alphabetic data (such as the account name and EIN, and the fiduciary name and address) are printed.
  • Current year income less retained capital gain (using next year's rates)
    -Estimate amounts are calculated based on this year's income. Capital gain income is not included in the calculation. If the estimated tax is zero, 1041-ES vouchers are not printed.
  • Current year income as adjusted (using next year's rates)
    -Overrides can be entered using the account binder's Estimate Options and Application of Overpayment page. To access this page from the account binder, select the
    Tax Review-Estimate and Penalties
     main topic then the
    Estimate Options and Application of Overpayment
     subtopic.
  • Specific amount entered on each trust account
    -A specific estimate amount can be entered using the account binder's Estimate Options and Application of Overpayment page.
Option upon which federal estimate is to be based (Form 1041-ES)
 (Continued)
If you use ONESOURCE Trust Tax to electronically file federal estimates, set this option to one of the selections listed below. Otherwise, 1041-ES vouchers are generated when the tax return is processed.
  • Safe harbor estimate, no vouchers printed and no amounts show on diagnostic page
  • Safe harbor estimate, no vouchers printed but amounts show on diagnostic page
  • No estimate computed or printed
When the current year federal tax liability (Form 1041-ES) is less than ...
the total estimate will be paid in the...
The
When the current year federal tax liability (Form 1041-ES) is less than …
 and
the total estimate will be paid in the …
 options identify the dollar threshold that triggers the entire estimated tax to be paid in a specific quarter. The total estimate is paid in the quarter selected when the total tax liability is less than the dollar amount entered.
Enter the dollar amount of the dollar threshold in the
When the current year federal tax liability (Form 1041-ES) is less than …
 option. Select the quarter in which the entire estimated tax amount will be paid in
the total estimate will be paid in the …
 option.
Federal "alphabetic only" estimate will be generated when the tax liability (Form 1041-ES) is greater than ...
If the tax liability is greater than the amount entered in this option, 1041-ES vouchers are generated with only alphabetic data printed. No amounts are calculated or shown on the vouchers. For example, the account name and EIN as well as the fiduciary name and address are printed but no amounts are calculated or shown.
Credit federal overpayment (Form 1041-ES) per overpayment application option when "alphabetic only" range specified
This option is used only if an amount is entered in the
Federal "alphabetic only" estimate will be generated when the tax liability (Form 1041-ES) is greater than …
 option. If this option is set to
Yes
, any overpayment is applied based on how the
Application of federal overpayment of tax (Form 1041-ES)
 option is set. If this option is set to
No
 (the default), the overpayment is not applied when alphabetic only estimate vouchers are used.
Application of federal overpayment of tax (Form 1041-ES)
This option does not apply if the
Option upon which federal estimate is to be based (Form 1041-ES)
 option is set to
No estimate computed or printed
 or
Estimates with only "alphabetic" information
. The selections for this option include:
  • Refund entire overpayment
    -This is the default.
  • Apply to first installment due, refunding any excess
  • Apply to first 2 successive installments, refunding any excess
  • Apply to successive installments, refunding any excess
Limit federal overpayment application of tax to a maximum of ...
Enter the dollar amount by which you want to limit the federal overpayment amount to be applied to federal 1041 estimated tax payments. For example, if you enter $5,000 in this option and the federal overpayment amount to be applied to 2023 estimated tax payments is $6,400 then the federal overpayment application is limited to $5,000.
Application of federal overpayment of tax treated as having been paid by beneficiaries (1041-T)
This option determines how the federal overpayment of tax is applied and credited. The selections include:
  • Do not credit any overpayment of estimated tax to beneficiaries
    -This is the default.
  • Apply to next year per overpayment application option, with excess credited to beneficiaries
    -The
    Application of federal overpayment of tax (Form 1041-ES)
     option is applied first, and any excess is credited to the beneficiaries.
  • On final year return, treat all estimated tax as having been paid by beneficiaries
Option upon which federal estimate is to be based (Form 990-W)
This option determines how estimated taxes are calculated for Form 990-W. The selections include:
  • Current year tax liability (safe harbor estimate)
    -The safe harbor estimate is calculated at the time the tax return is processed. This is the default.
  • No estimate computed or printed
    -The
    Application of federal overpayment of tax (990-W)
     option is ignored and no overpayment is applied.
  • Estimate with only "alphabetic" information
    -No amounts print on Form 990-W. Only alphabetic data (such as the account name and EIN, and the fiduciary name and address) is printed.
  • Current year income less Schedule D gain (using next year's rates)
    -Estimate amounts are calculated based on this year's income. Capital gain income is not included.
  • Current year income as adjusted (using next year's rates)
    -Adjustments can be entered using the account binder's Estimate Options and Application of Overpayment page. To access this page from the account binder, select
    Tax Review-990
     then
    Estimate Options and Application of Overpayment
    .
  • Specific amount entered on each private foundation account
    -A specific estimate amount can be entered using the account binder's Estimate Options and Application of Overpayment page.
When the current year excise tax liability (Form 990-W) is less than ...
the total estimate will be paid in the ...
The
When the current year excise tax liability (Form 990-W) is less than …
 and
the total estimate will be paid in the …
 options identify the dollar threshold that triggers the entire excise tax amount to be paid in a specific quarter. The total excise tax amount is paid in the selected quarter when the total tax liability is less than the dollar amount entered.
Enter the dollar amount of the dollar threshold in the
When the current year excise tax liability (Form 990-W) is less than …
 option. Select the quarter in which the entire excise tax amount will be paid in
the total estimate will be paid in the …
 option.
Federal "alphabetic only" estimate will be generated when the excise tax liability (Form 990-W) is greater than …
If the tax liability is greater than the amount entered in this option, Form 990-W is generated with only alphabetic data printed. No amounts are calculated or shown. For example, the account name and EIN as well as the fiduciary name and address are printed but no amounts are calculated or shown.
Credit federal overpayment (Form 990-W) per overpayment application option when "alphabetic only" range specified
This option is used only if an amount is entered in the
Federal "alphabetic only" estimate will be generated when the tax liability (Form 990-W) is greater than …
 option. If this option is set to
Yes
, any overpayment is applied based on how the
Application of federal overpayment of tax (Form 1041-ES)
 option is set. If this option is set to
No
 (the default), the overpayment is not applied when alphabetic only estimates are used.
Application of federal overpayment of tax (Form 990-W)
This option does not apply if the
Option upon which federal estimate is to be based (Form 990-W)
 option is set to
No estimate computed or printed
 or
Estimates with only "alphabetic" information
. The selections for this option include:
  • Refund entire overpayment
    -This is the default.
  • Apply to first installment due, refunding any excess
  • Apply to first 2 successive installments, refunding any excess
  • Apply to successive installments, refunding any excess
Option upon which RESIDENT state estimate is to be based
This option determines how resident state estimated taxes are calculated. The selections include:
  • Current year tax liability (safe harbor estimate)
    -The safe harbor estimate is calculated at the time the state tax return is processed. The applicable state voucher form is printed. This is the default.
  • Safe harbor estimate, no vouchers printed and no amounts show on diagnostic page
    -The safe harbor estimate is calculated at the time the state tax return is processed. The applicable state voucher form is not printed, and no amounts show on the Diagnostic page of the tax return.
  • Safe harbor estimate, no vouchers printed but amounts show on diagnostic page
    -The safe harbor estimate is calculated at the time the state return is processed. The applicable state voucher form is not printed, but amounts show on the Diagnostic page of the tax return.
  • No estimate computed or printed
    -The
    Application of state overpayment of tax
     option is ignored and no overpayment is applied.
  • Estimates with only "alphabetic" information
    -No amounts print on the state voucher form. Only alphabetic data (such as the account name and EIN, and the fiduciary name and address) is printed.
  • Current year income less retained capital gain (using next year's rates)
    -Estimate amounts are calculated based on this year's income. Capital gain income is not included.
  • Current year income as adjusted (using next year's rates)
    -Overrides can be entered using the account binder's state Estimate Options page. To access this page from the account binder, select the
    States
     main topic then the
    Estimate Options
     link for the state.
  • Specific amount entered on each trust account
    -A specific estimate amount can be entered using the account binder's state Estimate Options page.
If you use ONESOURCE Trust Tax to electronically file state estimates, set this option to one of the selections listed below. Otherwise, state vouchers are generated when the tax return is processed.
  • Safe harbor estimate, no vouchers printed and no amounts show on diagnostic page
  • Safe harbor estimate, no vouchers printed but amounts show on diagnostic page
  • No estimate computed or printed
Option upon which NON-RESIDENT state estimate is to be based
This option determines how nonresident state estimated taxes are calculated. The selections include:
  • Current year tax liability (safe harbor estimate)
    -The safe harbor estimate is calculated at the time the nonresident state tax return is processed. The applicable state voucher form is printed. This is the default.
  • Safe harbor estimate, no vouchers printed and no amounts show on diagnostic page
    -The safe harbor estimate is calculated at the time the nonresident state tax return is processed. The applicable state voucher form is not printed, and no amounts show on the Diagnostic page of the tax return.
  • Safe harbor estimate, no vouchers printed but amounts show on diagnostic page
    -The safe harbor estimate is calculated at the time the nonresident state return is processed. The applicable state voucher is not printed, but amounts show on the Diagnostic page of the tax return.
  • No estimate computed or printed
    -The
    Application of state overpayment of tax
     option is ignored and no overpayment is applied.
  • Estimates with only "alphabetic" information
    -No amounts print on the state voucher form. Only alphabetic data (such as the account name and EIN, and the fiduciary name and address) is printed.
  • Specific amount entered on each trust account
    -A specific estimate amount can be entered using the account binder's state Estimate Options page. To access this page from the account binder, select the
    States
     main topic then the
    Estimate Options
     link for the state.
When the current year state tax liability is less than ...
the total estimate will be paid in the …
The
When the current year state tax liability is less than …
 and
the total estimate will be paid in the …
 options identify the dollar threshold that triggers the entire state estimated tax to be paid in a specific quarter. The total estimate is paid in the selected quarter when the total tax liability is less than the dollar amount entered.
Enter the dollar amount of the dollar threshold in the
When the current year state tax liability is less than …
 option. Select the quarter in which the entire estimated tax amount will be paid in
the total estimate will be paid in the …
 option.
State "alphabetic only" estimate will be generated when the tax liability is greater than ...
If the tax liability is greater than the amount entered in this option, state vouchers are generated with only alphabetic data printed. No amounts are calculated or shown. For example, the account name and EIN as well as the fiduciary name and address are printed but no amounts are calculated or shown.
Credit state overpayment per overpayment application option when "alphabetic only" range specified
This option is used only if the
State "alphabetic only" estimate will be generated when the tax liability is greater than …
 option has an amount entered. If this option is set to
Yes
, any overpayment is applied based on the selection in the
Application of state overpayment of tax
 option. If this option is set to
No
 (the default), the overpayment is not applied when alphabetic only estimates are used.
Application of state overpayment of tax
This option is ignored if the
Option upon which RESIDENT state estimate is to be based
 option is set to
No estimate computed or printed
 or
Estimates with only "alphabetic" information
. The selections include:
  • Refund entire overpayment
    -This is the default.
  • Apply to first installment due, refunding any excess
  • Apply to first 2 successive installments, refunding any excess
  • Apply to successive installments, refunding any excess
Limit state overpayment application of tax to a maximum of ...
Enter the dollar amount by which you want to limit the state overpayment amount to be applied to state 1041 estimated tax payments. For example, if you enter $5,000 in this option and the state overpayment amount to be applied to 2023 estimated tax payments is $6,400 then the state overpayment application is limited to $5,000.
Origin of federal estimated tax payments (Form 2210 for Form 1041)
This option determines the origin of estimate payment information (such as the amount or date paid) used in Form 2210 computations. The selections include:
  • Use payments posted to tax codes 79 & 80
    -Transactions loaded from your trust accounting system that are posted to tax codes 79 and 80 are used to determine the estimate payment information. This is the default.
  • If
    Use payments posted to tax codes 79 & 80
     is selected, the estimate amount must be posted to the trust accounting system then loaded into your ONESOURCE Trust Tax database before the amount is available for calculating Form 2210.
  • Use amounts per prior year tax return
    -If quarterly estimate amounts were calculated at the time last year's tax return was computed, those amounts and dates are shown as the actual estimate payment information.
  • Use only amounts reported on quarterly Electronic Estimate filing
    -The amounts and dates from your federal electronic estimate data are used.
  • Use payments posted to tax codes 79 & 80 for Qtrs 1-3 and Electronic Estimate amounts for Qtr 4
    -Transactions loaded from your trust accounting system that are posted to tax codes 79 and 80 are used to determine the estimate payment information for the first, second and third quarters. For the fourth quarter, the estimate amount is available as soon as the estimates are electronically filed with the IRS.
Origin of federal annualized income installment information from Electronic Estimates (for Form 1041)
This option is applicable only if quarterly estimates are calculated using ONESOURCE Trust Tax. The selections include:
  • Populate all periods when annualized method has been used to compute ANY of the installments
    -The Form 2210 worksheet information is populated with the annualized information for all quarters when the annualized method is chosen (rather than the safe harbor estimate) as the estimate to be paid for any quarter. This is the default.
  • Always populate for all 4 periods
    -The Form 2210 worksheet is populated with the annualized information for all quarters regardless of the method chosen as the estimate to be paid.
  • Only populate periods in which the annualized method was actually utilized
    -The Form 2210 worksheet is populated only for the quarters in which the annualized method was chosen as the estimate to be paid.
note
ONESOURCE Trust Tax does not recommend using the
Only populate periods in which the annualized method was actually utilized
 selection. The Form 2210 Instructions indicate that if data for one quarter is used, then data for all four quarters must be used on the Form 2210 annualized income worksheet. If
Only populate periods in which the annualized method was actually utilized
 is selected and estimates for one or more periods (but not all) were used, then the annualized method is used to compute the correct amount of underpayment penalty.
Compute/print of federal underpayment penalty Form 2210 (for Form 1041)
This option determines whether Form 2210 is generated with Form 1041. Even though an underpayment penalty is due or the annualized income installment method is used to compute an estimate payment, you may not be required to file Form 2210 with the IRS.
The selections include:
  • Print form only if required or penalty is due or no penalty owed due to use of the prior year tax
    -Form 2210 is generated only if it is: 1) required to be filed with the IRS; 2) a penalty is due; or, 3) no penalty is due because the account met the safe harbor requirement. This is the default.
  • Print form only if required to be filed or penalty is due
    -Form 2210 is generated only if it is: 1) required to be filed with the IRS; or, 2) a penalty is due.
  • Print form only if required to be filed
    -Form 2210 is generated only if it is required to be filed with the IRS.
  • Always print form, even if no penalty applies
    -Except for final year accounts, Form 2210 is generated even if no penalty applies.
  • Never compute or print form
    -Form 2210 is never generated and no penalty is calculated.
Carry of underpayment penalty to face of federal return (for Form 1041)
This option determines whether the underpayment penalty calculated on Form 2210 is reported on page 1 of Form 1041. The selections include:
  • Always carry any computed penalty to face of return
    -The penalty calculated on Form 2210 is reported on Form 1041 and is included in the amount due to the IRS. This is the default.
  • Do not carry penalty unless underpayment form is required to be filed
    -Unless an IRS requirement for filing Form 2210 is satisfied, the penalty calculated on Form 2210 is not reported on Form 1041. The IRS applies the underpayment penalty to the account.
  • For example, the IRS does not require Form 2210 to be filed when a penalty is due because 100% of the prior year tax liability or 90% of the current year tax liability was not paid. When
    Do not carry penalty unless underpayment form is required to be filed
     is selected, the penalty is not reported on Form 1041, but the IRS applies the underpayment penalty to the account.
  • Never carry penalty to the face of return
    -The penalty calculated on Form 2210 is never reported on Form 1041. The IRS applies the underpayment penalty to the account.
Origin of federal estimated tax payments (Form 2220 for Form 990-PF)
This option determines the origin of estimated tax payment information (such as the amount or date paid) used to calculate Form 2220 with Form 990-PF. The selections include:
  • Use actual cash payments posted to tax codes 79 & 80 for estimate amounts
  • Use amounts per prior year tax return
Origin of federal annualized income installment information from Electronic Estimates (for Form 990-PF)
This option is applicable only if 990-PF quarterly estimates are calculated using ONESOURCE Trust Tax. The selections include:
  • Populate all periods when annualized method has been used to compute ANY of the installments
    -The Form 2220 worksheet information is populated with the annualized information for all quarters when the annualized method is chosen as the estimate to be paid for any quarter. This is the default.
  • Always populate for all 4 periods
    -The Form 2220 worksheet is populated with the annualized information for all quarters regardless of the method chosen as the estimate to be paid.
  • Only populate periods in which the annualized method was actually utilized
    -The Form 2220 worksheet is populated only for the quarters in which the annualized method was chosen as the estimate to be paid.
Compute/print of federal underpayment penalty Form 2220 (for Form 990-PF)
This option determines whether Form 2220 is generated with Form 990-PF. Even though an underpayment penalty is due or the annualized income installment method is used to compute an estimate payment, you may not be required to file Form 2220 with the IRS.
The selections include:
  • Print form only if required or penalty is due or no penalty owed due to use of prior year tax
    -Form 2220 is generated only if it is: 1) required to be filed with the IRS; 2) a penalty is due; or, 3) no penalty is due because the account met the safe harbor requirement. This is the default.
  • Print form only if required to be filed or penalty is due
    -Form 2220 is generated only if it is: 1) required to be filed with the IRS, or 2) a penalty is due.
  • Print form only if required to be filed
    -Form 2220 is generated only if it is required to be filed with the IRS.
  • Always print form, even if no penalty applies
    -Except for final year accounts, Form 2220 is printed even if no penalty applies.
  • Never compute or print form
    -Form 2220 is never generated and no penalty calculated.
Carry of underpayment penalty to face of federal return (Form 990-PF)
This option determines whether the underpayment penalty calculated on Form 2220 is reported on Form 990-PF. The selections include:
  • Always carry any computed penalty to face of return
    -The penalty calculated on Form 2220 is reported on Form 990-PF and is included in the amount due to the IRS. This is the default.
  • Do not carry penalty unless underpayment form is required to be filed
    -Unless an IRS requirement for filing Form 2220 is met, the penalty calculated on Form 2220 is not reported on Form 990-PF. The IRS applies the underpayment penalty to the account.
  • For example, the IRS does not require Form 2220 to be filed when a penalty is due because 100% of the prior year tax liability or 90% of the current year tax liability was not paid. When
    Do not carry penalty unless underpayment form is required to be filed
     is selected, the penalty is not reported on Form 990-PF, but the IRS applies the underpayment penalty to the account.
  • Never carry penalty to the face of return
    -The penalty calculated on Form 2220 is never reported on Form 990-PF. The IRS applies the underpayment penalty to the account.
Origin of state estimated tax payments
This option determines the origin of estimated payment information (such as the amount or date paid) used to calculate the state underpayment penalty. The selections include:
  • Use actual cash payments posted to tax codes 81 & 82 for estimate amounts
    -Transactions loaded from your trust accounting system that are posted to tax codes 81 and 82 are used to determine the estimate payment information. This is the default.
  • If
    Use actual cash payments posted to tax codes 81 & 82 for estimate amounts
     is selected, the estimate amount must be posted to the trust accounting system then loaded into your ONESOURCE Trust Tax database before the amount is available for calculating the state underpayment penalty.
  • Use amounts from prior year tax return
    -If quarterly estimate amounts were calculated at the time last year's tax return was computed, those amounts and dates are shown as the actual estimates made.
  • Use only amounts reported on quarterly Electronic Estimate filing
    -The amounts and dates from your federal electronic estimate data are used.
  • Use actual cash payments (tax codes 81 & 82) for Qtrs 1-3, & Electronic Estimate filing amounts for Qtr 4
    -Transactions loaded from your trust accounting system that are posted to tax codes 81 and 82 are used to determine the estimate payment information for the first, second and third quarters. For the fourth quarter, the estimate amount is available as soon as fourth quarter estimates are electronically filed with the IRS.
Origin of state annualized income installment information from Electronic Estimates
This option is applicable only if state quarterly estimates are calculated using ONESOURCE Trust Tax. The selections include:
  • Populate all periods when annualized method has been used to compute ANY of the installments
    -The state underpayment penalty worksheet is populated with the annualized information for all quarters when the annualized method is chosen (rather than the safe harbor estimate) as the estimate to be paid for any quarter. This is the default.
  • Always populate for all 4 periods
    -The state underpayment penalty worksheet is populated with the annualized information for all quarters regardless of the method chosen as the estimate to be paid.
  • Only populate periods in which the annualized method was actually utilized
    -The state underpayment penalty worksheet is populated only for the quarters in which the annualized method was chosen as the estimate to be paid.
  • ONESOURCE Trust Tax does not recommend using the
    Only populate periods in which the annualized method was actually utilized
     selection. Most state underpayment penalty instructions indicate that if data for one quarter is used, then data for all four quarters must be used on the state annualized income worksheet.
State underpayment annualization periods for printing 2210 with tax return (does not effect electronic estimates)
Some state annualized income periods are different from the federal annualized income periods. This option determines whether the federal or state annualization periods are used for the state underpayment penalty worksheet. The selections include:
  • Use federal (1041) annualization periods ending 2/28, 4/30, 7/31 and 11/30
    -The state annualization periods are the same as the federal annualization periods. This is the default.
  • Use annualization periods provided on state underpayment penalty form
    -The state annualization period is used.
note
ONESOURCE Trust Tax recommends using the default selection. If this option is set to
Use annualization periods provided on state underpayment penalty form
, then a state underpayment penalty may be generated since state estimates paid are based on the federal annualization periods.
Compute/print of state underpayment penalty form
This option determines whether the state underpayment penalty form is generated with the state tax return. The selections include:
  • Print form only if required or penalty is due or no penalty owed due to use of the prior year tax
    -The state underpayment penalty form is generated only if it is: 1) required to be filed with the state taxing authority; 2) a penalty is due; or 3) no penalty is due because the account met the safe harbor requirement. This is the default.
  • Print form only if required to be filed or penalty is due
    -The state underpayment penalty form is generated only if it is: 1) required to be filed with the state taxing authority, or 2) a penalty is due.
  • Print form only if required to be filed
    -The state underpayment penalty form is generated only if it is required to be filed with the state taxing authority.
  • Always print form, even if no penalty applies
    -The state underpayment penalty form is generated even if no penalty applies.
  • Never compute or print form
    -No state underpayment penalty form is generated and no penalty calculated.
Carry of underpayment penalty to face of state return
This option determines whether the penalty calculated on the state underpayment penalty form is reported on the state tax return. The selections include:
  • Always carry any computed penalty to the face of return
    -The penalty calculated on the state underpayment penalty form is reported on the state tax return and is included in the amount due to the state. This is the default.
  • Do not carry penalty unless underpayment form is required to be filed
    -Unless the state underpayment penalty filing requirements are met, the penalty calculated on the state underpayment penalty form is not reported on the state tax return.
  • Never carry penalty to the face of return
    -The penalty calculated on the state underpayment penalty form is never reported on the state tax return.
Determination of 990-PF Tax Rate (Annualization Alternative) (Option not available for estimate tax year 2020 forward)
This option is unavailable for 990-PF quarterly estimates beginning with estimate tax year 2020.
This option is used to calculate 990-PF quarterly estimates. It applies to only the annualized alternative tax calculation. The default selection is
Use 2%
.