You are correct that the qualified dividends are included in the AGI for each quarter, and so that is included in the figures on Schedule 2210AI Part I line 1. But TurboTax doesn't know how much of that income is due to qualified dividends, which are taxed differently than ordinary income. In my return, in the Forms view, Form 2210AI Part I Capital Gains Tax Computation Smart Worksheet (for figuring the amount of tax due for that quarter) has an entry on line E for column d only (the whole year). This is presumably taken from Form 1040 line 3a, which is the figure for the whole year. The Step by Step interview did not ask me to break down my qualified dividends by tax quarter, so the program wouldn't know how much to enter on line E for the first three tax quarters of the year. I don't know if this would also be an issue for the other lines (A-D, F, and G) of the Smart Worksheet too; those other lines don't apply to my situation.
As a result, the amount of tax TurboTax believes is due for the quarter, as shown on line 14 (just below the Smart Worksheet), is higher for the first three quarters than it should be because the qualified dividends for that quarter are getting taxed at the full tax rate rather than the lower qualified dividends tax rate.
Since TurboTax knows that I had qualified dividends, it would be best if it asked me for the quarterly breakdown and completed line E in the Capital Gains Tax Computation Smart Worksheet accordingly. At a minimum, it should flag it as something that might need correcting during the Federal Review. I was glad that TurboTax allowed me to override the figures in that worksheet and subsequently re-calculated the tax due.
Thanks for asking for clarification. Let me know if you have any additional questions.
