TurboTax doesn’t handle form 2210 correctly.
Line 7: If you have zero withholding taxes, Line 4 (Current year tax) – Line 6 ($0 withholding), is likely going to exceed $1000.
Line 9: Line 9 (required annual payment) is likely going to be greater than line 6 ($0 withholding)
Those two lines trigger the IRS to assess a penalty. The IRS expects equal estimated payments and assesses a penalty and interest from the start of the tax year even if the unplanned income is at the end of the year and the taxpayer has made extra payments for unexpected income and has overpaid quarterly taxes for every quarter based on actual cumulative.
This is particularly problematic if income comes from dividends that don’t pay out equally throughout the year or if you do a ROTH conversion that results in a lump sum of ordinary income and you make a special estimated tax payment to cover the taxes on the same day as the conversion. I did find a work around. I went back to the underpayment penalty test and increased the only number available to change to greater than double my actual current tax. That gave me a box to check that forced creation of Form 2210 with box C checked for annualized income installment method. I shouldn’t have to enter false data to get the correct answer.
