AmandaR1
New Member

Business & farm

The annualized method is an option that considers when you earned all income and incurred all expenses, on your return (both W-2 and self-employment, everything you've entered). The standard method presumes all income was earned and estimates were earned/paid, evenly throughout the year. 

Therefore, the annualized method does not usually benefit you, unless you earned most of your income at the end of the year. While saving money is always the goal, you may consider if your penalty is worth entering the annualized method because the underpayment penalty tends to be very small. 

As far as knowing the amounts, as the initial screens explain (see screenshot), you need to have detailed records of when all income and expenses were earned and paid, during each quarter. However, the software helps you out by showing the total amount that you have for that category in the fourth, total year, row. 

See the screenshot for Annualized Adjusted Gross Income screen. All you need to do is allocate that amount for the first 3 quarters, as is applicable. Make sure you've entered all income and expenses in the software. Extremely detailed records would be needed to know the exact break outs. 

Please let me know if you have questions.