So in my case, do I have to add up each item of income for each period rather than divide by 4 quarters? No, when filling out the form you will use the annualized method.
Seems to me I would need to file Form 2210 because my income varied and penalty can be reduced by treating the tax withheld as paid during the first quarter? You are correct. You will need to walk through the entries for form 2210. As you walk through the questions for the penalty waiver, you will come to a question Annualized Income Method, do you want to annualize your income, select yes. This will lower your penalty as your large amount of income received in the final quarter will only be "penalized" for missing your January payment. It won't be based on the entire year.
When you get near the end of your return, TurboTax will say lets see if we can waive the penalty. Select yes to get to form 2210. You can also get there by clicking Other Tax Situations>>Start next to Additional Tax Payments>>Start next to Underpayment Penalties.
How do I get the exception to penalty with or without Form 2210? You will need to use form 2210, that is the only way.
It seems penalty is automatically calculated and added to my total tax amount due. Separately, if I made an estimated tax payment in the next couple of days before I finalize my return, would the payment eliminate or reduce the penalty? No. In order to not get an underpayment penalty, the payment would have had to be received by January 15th.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
