Prior year safe harbor method in Scenario Analysis

Taxpayers have two methods to achieve safe harbor status and avoid underpayment penalties: they can pay the lesser of 90% of the current year's tax bill or 100%/110% of the prior year's tax bill (depending on AGI of the prior year).

Holistiplan supports both methods in Scenario Analysis, provided that the taxpayer has an uploaded return from the year prior to the one being modeled and that filing status does not change from year to year.  Additionally. the prior year return needs to have been a filed return; the system will not calculate prior year AGI/tax for returns marked "Draft."

In the example below, Column 1 illustrates the information of an uploaded return, with Column 2 being a current year projection. 

In the Withholding Calculator, Holistiplan calculates 90% of the projected tax liability while also illustrating prior year AGI, prior year total tax (net of refundable credits) and the corresponding 100%/110% prior year tax amount. If prior year AGI was $150,000 or less ($75,000 or less if married filing separately), the safe harbor is 100% of prior year tax. If it exceeded that threshold, the safe harbor is 110%. 

The bold amount reflects the lessor of the prior year and current year safe harbor calculations, reflecting the amount that the taxpayer needs to pay to prevent underpayment penalties.

For scenarios created prior to the release of this functionality in August, 2026, changing the year or filing status of the scenario and then changing it back will trigger the system to look for a prior year return, and thereby result in the appearance of the prior year safe harbor information. 

Related resources

• IRS Instructions for Form 2210 (current year) — irs.gov/instructions/i2210
• IRS Publication 505, Tax Withholding and Estimated Tax — irs.gov/pub505