How to Complete and File Virginia Form 500C: Corporate Estimated Tax Underpayment

Virginia Form 500C is the worksheet a corporation or electing pass-through entity files with its Virginia return to test whether any quarterly estimated tax installment fell short and, if so, to calculate the addition to tax owed. It attaches to Form 500 for corporations or Form 502PTET for electing PTEs, and it walks installment by installment through the year rather than looking only at the year-end balance.¹

Who Has to File It

Any Virginia corporation or electing PTE that expects its income tax after credits to exceed $1,000 for the year is required to make estimated payments.² If any installment during the year was smaller than it should have been, the entity is potentially subject to an addition to tax and files Form 500C to compute the amount or to show that a safe harbor applies.³

A refund on the final return does not excuse you. The charge tests whether each installment was large enough on the day it was due, not whether the year balances out. A corporation that pays nothing until December and then overpays that single installment still owes an addition for the earlier quarters.

Installment Due Dates and Amounts

Estimated payments are due on the 15th day of the 4th, 6th, 9th, and 12th months of the tax year. For a calendar-year filer, that is April 15, June 15, September 15, and December 15. Each installment is 25 percent of the required annual payment when the requirement exists before the fourth month.⁴

If the estimated tax requirement first arises later in the year, the schedule compresses. Between the third and sixth month, the liability splits into three equal installments starting with the sixth-month date. Between the fifth and ninth month, it splits into two equal installments of 50 percent each. After the eighth month, the entire amount is due by the 12th-month date.⁴

Three Safe Harbors That Eliminate the Charge

Form 500C provides three exceptions. Meet any one of them for a given installment and the addition to tax for that quarter goes away. The tests are checked separately for each installment, so a filer can rely on Exception 1 for one quarter and Exception 3 for another.

Exception 1 — Prior year’s tax. Cumulative payments by each due date equal or exceed the matching share of the prior year’s tax: 25 percent by the first due date, 50 percent by the second, 75 percent by the third, and 100 percent by the fourth. The prior year has to have been a full 12-month year with a tax liability shown on the return.³
Exception 2 — Prior year’s income at current rates. Payments equal or exceed the tax that would result from applying current-year rates to the facts on the prior year’s return. This one works even if the prior year showed no tax.³
Exception 3 — Tax on annualized income. Payments equal or exceed 90 percent of the tax on annualized income for the months preceding each due date, with cumulative thresholds of 22.5 percent, 45 percent, 67.5 percent, and 90 percent.³

Exception 1 is the simplest to apply when last year’s liability was stable and you matched it in four equal installments. Exception 3 fits businesses whose income arrives unevenly, since it measures against actual earning pace instead of a flat annual figure.

Working Through the Form

Before you start, pull the prior year’s Virginia return, this year’s income tax after credits, and a record of every estimated payment with the date and amount. The form has three parts.

Part I: Required Annual Payment

Line 1 is current-year income tax reduced by nonrefundable and refundable credits. Line 2 is 90 percent of that figure. Line 3 is the tax from the prior year’s return. The smaller of Line 2 or Line 3 is the required annual payment, and that number becomes the benchmark for each installment.¹

Part II: Underpayment by Installment

Four columns, one for each due date. Enter 25 percent of the required annual payment in each column, then subtract the payments actually made by that due date. A shortfall in any column is an underpaid installment. On Line 4, include withholding a pass-through entity made on the corporation’s behalf.⁵ A payment made on a later installment date counts against an earlier shortfall only to the extent it exceeds what was required for that later date.⁶

Part III: Addition to Tax

For each installment that is underpaid and unprotected by an exception, the charge runs from the installment due date until the shortfall is paid or the 15th day of the fourth month after the close of the tax year, whichever comes first.⁶ The rate is the federal underpayment rate under IRC § 6621 plus 2 percent.¹ For the first quarter of 2026, the combined rate is 9 percent.⁷

The total addition to tax carries to Form 500, Line 20 for corporations, or Form 502PTET, Section IV, Line 16 for electing PTEs.⁵

The Annualized Income Method for Uneven Earners

Corporations with income that concentrates in certain quarters can often reduce or eliminate the charge by annualizing. To annualize, take taxable income for the months in the period, multiply by 12, and divide by the number of months.¹ A corporation that earned $100,000 in its first three months annualizes to $400,000, then tests the first installment against 22.5 percent of the resulting tax.

The periods offer some choice. For the second installment, use either the first three months or the first five. For the third, use six or eight. For the fourth, use nine or eleven. Choose whichever period produces the lower required payment.⁶ Attach the annualization computation to the form.

Filing the Form With Your Return

Form 500C does not travel on its own. Include it with Form 500 or Form 502PTET.⁵ Virginia’s e-file system attaches it and rolls the addition into the total balance due. On paper, place Form 500C directly behind the primary return and confirm the mailing address on the Department of Taxation site, since it differs depending on whether a payment is enclosed.

Keep the completed form together with bank statements showing the date and amount of each estimated payment. If the department recalculates and issues a notice, those records are what resolves the question fastest.

What Form 500C Is Not

Form 500C is the corporate and electing PTE form. Virginia individuals, estates, and trusts use Form 760C instead, which carries a much lower threshold: no addition to tax if the total underpayment across all installments is $150 or less.¹ Georgia does not use a “Form 500C” for underpayment at all; Georgia individuals and fiduciaries file Form 500-UET,⁸ and Georgia corporations file Form 600-UET.⁹

1
Virginia Department of Taxation. Form 500C – 2024 Underpayment of Virginia Estimated Tax by Corporations and Electing Pass-Through Entities
2
Virginia Code Commission. Virginia Code 58.1-500 – Declarations of Estimated Income Tax Required
3
Virginia Department of Taxation. 2025 Form 500C – Underpayment of Virginia Estimated Tax by Corporations and Electing Pass-Through Entities
4
Virginia Department of Taxation. Corporation Income Tax
5
Virginia Department of Taxation. Virginia Elective Pass-Through Entity Tax 2025 Form 502PTET Instructions
6
Virginia Code Commission. Virginia Code 58.1-504 – Failure to Pay Estimated Income Tax
7
Virginia Department of Taxation. Tax Bulletin 25-7
8
Georgia Department of Revenue. 500-UET Underpayment of Estimated Tax by Individual/Fiduciary
9
Georgia Department of Revenue. 600-UET Underpayment of Estimated Tax by Corporations