I received a large chunk of my AGI in December 2024 from Required Minimum Distributions from tax free accounts (another thing that sucks about being in your 70's). As a result I was under withheld and was being charged an underpayment penalty of over $1,000. I figured this was exactly the situation that was meant to be addressed by using the annualized method (actually inputting when you received income as opposed to assuming it was equally spread throughout the year), so I went back to segment of the interview when the tax underpayment penalty was calculated and elected to use the annualized method. The interview then required me to allocate my received income into three periods--1/1-3/31/24; 1/1/-5/31/24 and 1/1-8/3124. I had to do this not only for ordinary income but also for Short Term Cap Gains, Long Term Cap Gains and Qualified Dividends. I also had to allocate certain taxes paid (Medicare Taxes, Foreign Taxes) among these periods. Assembling all this data was a fair amount of work--but at the end of the process, TurboTax was telling me there was no difference in my underpayment penalty--still over $1,000. I said this cannot be and decided to delve into the forms.
When I looked at the Form for calculating the underpayment penalty (Form 2210) on the first page of the Form in Part II there is a box to be checked "If your income varied during the year and your penalty is reduced or eliminated when figured using the annualized income method. You must figure the penalty using Schedule A1...". This box was not checked. I then navigated to Schedule A1 to Form 2210 and observed that none of the information on actual payment dates of income and taxes that I laboriously entered into the interview had been carried to the schedule. So I proceeded to manually re-enter the information in the appropriate boxes on the Schedule. Voila, my underpayment penalty was reduced by over $500.
It would appear to me that this is a programming glitch which is failing to transfer the information I entered in the interview to the Schedule. This is a fault in the program which was going to cost me real money.
Of course, there is no one to talk to at TurboTax to point this fault out to--so Buyer Beware.
