There are several problems with Form 2210 that remain as of March 5:
- Failure to include 2020 refunds applied to 2021 taxes. 2020 refunds applied to 2021 taxes are not credited as tax payments in any column of Form 2210, Part III Line 11. (Part 2 Box C is checked, Box D is not). Instructions for Line 11 state they should be included: "Include the following payments: Any overpayment from your 2020 return applied to your 2021 estimated tax payments." For those that filed by April 15, the credit should be included in the first quarter for Line 11, but TT fails to include it in any quarter.
- Failure to include above-the-line charitable contributions. As many have pointed out, Schedule AI, line 7 fails to include any amount on Form 1040, line 12(b) (above the line charitable contributions: up to $300 single / $600 MFJ). Taxes calculated on lines 14(a), 14(b), and 14(c) are therefore slightly higher than they should be. (The deduction is properly included in the final tax calculation in 14(d), even though the taxable income shown on line 13(d) is incorrect.)
- 3. Tax computation in Schedule AI, line 14 (a), (b), (c). TT assumes that capital gains are one-time events for each quarter, while qualified dividends will continue throughout the year. Consequently, qualified dividends are annualized by multiplying by 4, 2.4, and 1.5 for the first through third quarters in the tax calculation, but capital gains are not multiplied by any factor. For example, if you are married filing joint and have $50,000 in income that includes $1000 in capital gain in the first quarter, TT calculates the taxes on (4*$50,000)-$1000 = $199,000 at regular tax rates and $1000 at 15% tax rates. However, if you have $50,000 in income that includes $1000 in qualified dividends it calculates the taxes on (4*50,000)-4*$1000 = $196,000 at regular tax rates and 4*$1000 = $4000 at 15% tax rates. The underlying assumptions that qualified dividends are recurring (and hence should be annualized) but capital gains are one-time-events (and hence should not be annualized) are reasonable for many, but not all.
