I'm writing from my own point of view (and I am NOT an accountant), and I use TurboTax Premier. I don't know if the other version of TurboTax give you the same experience. The Annualized Income Method is used to avoid underpayment of taxes during the year when much of your income is at the end of the year (in my case). FIRST, complete your taxes in TurboTax not using the Annualized Income Method. Once you are happy with that, then do the following:
Under the "Federal Taxes" gray tab at the top, select "Other Tax Situations". Then, under Additional Tax Payments section, select "Update" on the Underpayment penalties line. You will go through several screens (which you shouldn't have to do anything because you've already done your taxes), but you will come to a screen that asks you if you want to use the Annualized Income Method - well yes, so hit the "Yes" button.
At this point, to proceed, you will need several pieces of information. I have a month by month spreadsheet with this information. The pieces of information I needed were (there may be others but this was my tax situation):
1. Annualized Adjusted Gross Income
2. Qualified Dividends
3. Qualified Business Income - for most, reported on 1099-DIV box 5.
4. Other Taxes - One situation, you incur this when (filing status = single) you have income over $200,000 and your investment income is greater than zero.
As in other posts, you need to be able to summarize this information for the periods 1/1 - 3/31, 1/1 - 5/31, 1/1 - 8/31, and 1/1 - 12/31. Because you completed you taxes initially not using the Annualized Income Method, TurboTax will usually supply the totals (i.e. the 1/1 - 12/31 total).
I hope this helps, I invest a lot of time each year on the above mentioned spreadsheet because I've found timing is critical.
