5805: Underpayment of Estimated Tax by Individuals and Fiduciaries (2024)

Who files this form

Form FTB 5805 is for underpayment of estimated tax by individuals and fiduciaries. In most cases, the Franchise Tax Board (FTB) can figure the penalty for you, and you do not need to complete this form.

The form says you do not owe a penalty and should not file it if any of these conditions apply:

• Your tax liability after credits, including withholding but excluding estimated tax payments, for either 2023 or 2024 was less than $500, or less than $250 if married/RDP filing separately. This test excludes tax on lump-sum distributions and accumulation distributions of trusts.
• Your 2023 return covered a full 12 months, or would have if you had been required to file, and you had no tax liability on that return.
• Your withholding plus estimated tax payments, paid in the required installments, covered at least 90% of your 2024 tax or 100% of your 2023 tax, and you are not using the annualized income installment method. The prior-year percentage becomes 110% if your 2023 California adjusted gross income (AGI) exceeded $150,000, or $75,000 if married/RDP filing separately for 2024.

If your California AGI is at least $1,000,000, or $500,000 if married/RDP filing separately, you must use your 2024 tax for this test unless you meet one of the first two exceptions.

What you'll need

Have these returns and records available for the entries that apply to you:

• Your 2024 Form 540, Form 540NR, or Form 541, including tax, credits, and withholding amounts.
• Your 2023 tax return for the prior-year tax and AGI comparison.
• Records of your estimated tax payments and when you paid the underpayment.
• If you report uneven withholding, records showing the actual amounts withheld for each period and the actual withholding dates.
• If you request a penalty waiver, a written explanation. Attach a statement if you need more space.
• If you use the annualized income installment method, income and applicable deduction and credit information for each period, plus the tax table or tax rate schedule in your return instructions.

How to file

Attach Form FTB 5805 to the back of your Form 540, Form 540NR, or Form 541. Check the underpayment of estimated tax box on the applicable return:

• Form 540, line 113.
• Form 540NR, line 123.
• Form 541, line 44.

All filers must complete Parts I and II. If you use the annualized income installment method, skip the short method and go to Part III. If you do not use annualization and cannot use the short method, the form directs you to Worksheet II in the instructions.

For the short method, enter the penalty from line 13 on the applicable return line listed above and check the “FTB 5805” box.

The supplied form does not give a mailing address or e-filing directions.

Common mistakes

• Including estimated payments with withholding. Part II, line 3 is for withholding taxes only.
• Using the short method without checking eligibility. The form says to check the instructions first. Those instructions were not supplied here.
• Using Part III for steady income. Use this schedule only if you earned taxable income at an uneven rate during 2024, not at approximately the same rate each month.
• Starting Part III too soon. Complete Part II, lines 1 through 6 first.
• Annualizing only one installment. If you use the annualized method for one payment due date, you must use it for all payment due dates.
• Working across Part III before finishing a column. Complete lines 17 through 23 of each column before moving to the next.
• Reporting uneven withholding that does not match your return. The four amounts must total the withholding reported on the return lines identified in Part I, question 3.

Questions people ask

Can the FTB calculate the penalty for me?

Yes. The form says that in most cases, the FTB can figure the penalty and you do not have to complete Form FTB 5805.

How do I request a penalty waiver?

Answer “Yes” to Part I, question 1, and provide an explanation. Attach a statement if you need more space. Also check the underpayment box on Form 540, line 113; Form 540NR, line 123; or Form 541, line 44.

Could annualizing my income help if my earnings varied?

Yes. The form says the annualized method may produce a smaller required installment when taxable income was earned unevenly during 2024. The schedule automatically selects the smaller of the annualized installment or regular installment.

What if the short-method calculation shows no underpayment?

If Part II, short-method line 10 is zero or less, stop. The form says you do not owe the penalty and should not file Form FTB 5805.

Official sources

• https://www.ftb.ca.gov/forms/2024/2024-5805.pdf