Annualized Income Quarterly AGI

Forum|Forum|5 years ago
February 16, 2021
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I'm annualizing my income because I had capital gains in the fourth quarter and would pay an underpayment penalty if I don't (I had made the estimated tax for the capital gains in that quarter). I have income from a job as well. On the "Federal and CA AGI Adjustments" page, TurboTax asks for the AGI for quarters 1 to 3. Do I simply take the AGI minus the capital gains and divide by four and enter that amount for those fields? I have the same question for the "Itemized Deductions" page.

Please say it is because I have no idea how I can even begin to calculate the quarterly AGI and deductions. 🙂

Thank you in advance.

Best answer by MaryK4

To get the correct adjustment for quarters 1 to 3, you first want to subtract out the capital gain amount that was included in quarter 4- because the capital gain is included in the AGI. After you do that, you can use a quarter of the AGI less Cap Gain. For the Itemized Deductions your calculation will work since in general they should have been spread out evenly through the year.

The annualized income installment method annualizes your tax at the end of each period based on a reasonable estimate of your income, deductions, and other items relating to events that occurred from the beginning of the tax year through the end of the period.