New Underpayment Interest Exception/Waiver Codes

If your client qualifies for an exception or waiver for underpayment interest, a one-digit code must be entered in the box on the underpayment interest line (Form 1, line 57 or Form 2, line 34).

The acceptable codes and their explanations are as follows:

Code Number Explanation
2 UPI exception because there was no prior year tax liability
3 UPI exception because an estate/trust is funded on account of a decedent's death
4 UPI exception because 2/3 of gross income is from farming/fishing
5 UPI waiver because of a casualty/disaster
6 UPI waiver because of retirement or disability and underpayment was due to reasonable cause
7 UPI waiver because of active military duty, stationed outside of the US
8 Annualized income installment method used
9 Net operating loss carryforward

March 6, 2009