@Comptonwoods
Yep...that, in some situations, would do it.
The initial calculation that is done, by default, assumes all your income is earned evenly over the year, and used you withholding as being paid evenly...and Estimated taxes paid...as being paid on the dates you entered. Thus some of your cap gains in December are divided up over the entire year, and the taxes paid for those quarters may show up as a slight underpayment for some, or all of the first 3 quarters.
BUT, this is the default calculation...automatically done to eliminate a few million of taxpayers from the underpayment penalty, if this initial calculation ends up still being OK.
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For those who still show an underpayment penalty, they can go thru the Underpayment Penalty calculations on the "Other Tax Situations" page
But if you are using the desktop software....save your real tax return to a test file using "Save-As" , and then try out the "Annualized Income" method on that test file first. It's painful and requires a lot of detailed data about all your income, deductions & credits for the entire year... Since your extra income occurred in the last quarter, it would likely eliminate the penalty. BUT, plan on spending a whole day this weekend working it out.....like I said, maybe not worth the effort. (AND, the quarters are 3mo, 2mo, 3mo, and 4mo) IF it gets too messy, then you can abandon the test file and just go with your original as-is.
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
