topic Form 2210 Annualized Income - How to annualize itemized deductions? in Deductions & credits

Form 2210 Annualized Income - How to annualize itemized deductions?

stife94 — Mon, 23 Feb 2026 12:32:43 GMT

Filling out Form 2210 page 3 Schedule AI

Line 4 is for itemized deductions. Does anyone know how to handle state and local income taxes which are capped at $10,000?

Say for example I had $3000 in state, local and property taxes in the first three months of the year. The "annualization" factor is 4 which would make that part of my annual deductions $12,000. I know it's capped at $10,000 so am I supposed to only count $2,500? The next quarter is actually only two months. Would I cap myself at $1,666,67 (2/12 *10,000). No guidance on the IRS website.

Re: Form 2210 Annualized Income - How to annualize itemized deductions?

fanfare — Tue, 14 Feb 2023 20:48:24 GMT

instructions for Form 2210 schedule AI tells you exactly what to do.

Re: Form 2210 Annualized Income - How to annualize itemized deductions?

stife94 — Tue, 14 Feb 2023 21:31:26 GMT

It just says to add up the deductions for each period. Yeah, I can add my state and local income plus property taxes (and other deductions) for each period. Turbo Tax autofills the fourth column and DID cap the deduction i.e. they use the amount actually on Schedule A for the entire year. Seems odd to use two different methods on the same line. That's why I'm asking.

Re: Form 2210 Annualized Income - How to annualize itemized deductions?

fanfare — Wed, 15 Feb 2023 05:16:46 GMT

In your example,

for the first three periods jan-mar, jan-may jan-aug
you haven't hit the SALT cap yet.

@stife94

Re: Form 2210 Annualized Income - How to annualize itemized deductions?

stife94 — Thu, 16 Feb 2023 20:46:24 GMT

If I annualize the first quarter by multiplying by 4, it exceeds the SALT cap. I had to make a Q4 2021 estimate payment in January 2022. Combined with my Q1 2022 W-2 withholding, multiplying by 4 makes the deductions look ridiculous compared to the year end. And ignoring the annualization factor, I exceed the cap about half way through the year.

Re: Form 2210 Annualized Income - How to annualize itemized deductions?

fanfare — Fri, 17 Feb 2023 13:12:49 GMT

"If I annualize the first quarter by multiplying by 4, it exceeds the SALT cap."

irrelevant

"I had to make a Q4 2021 estimate payment in January 2022. Combined with my Q1 2022 W-2 withholding,"

why are you considering these amount.?

Line 4 is itemized deductions for the period. That's all.

Re: Form 2210 Annualized Income - How to annualize itemized deductions?

stife94 — Sat, 18 Feb 2023 18:41:01 GMT

"If I annualize the first quarter by multiplying by 4, it exceeds the SALT cap."

irrelevant

How did you reach that conclusion?

"I had to make a Q4 2021 estimate payment in January 2022. Combined with my Q1 2022 W-2 withholding,"

why are you considering these amount.?

Line 4 is itemized deductions for the period. That's all.

State taxes are a deductible expense when paid. Turbotax asks you if you made any payments for previous years. They're on the Schedule A Line 5 worksheet.

Re: Form 2210 Annualized Income - How to annualize itemized deductions?

Mike9241 — Sun, 19 Feb 2023 01:26:51 GMT

i would say you must take any limitations into account for each period so if you paid more than $2500 in deductible taxes the first period use $2500 to limit it to $10K, then a max of $4167 the 2nd period,

$6667 the 3rd. the 4th should be automatic because that populated from your return.

Re: Form 2210 Annualized Income - How to annualize itemized deductions?

fanfare — Sun, 19 Feb 2023 03:59:10 GMT

in the example the SALT deductions for the first period were $3,000, which means the property tax was no more than $3000.

The SALT limit is $10,000. he didn't reach that yet.

even with February property tax due of 10,000 the available deduction in the first quarter could be more than $10,000 after mortgage interest or charitable donations.

Re: Form 2210 Annualized Income - How to annualize itemized deductions?

dmertz — Sun, 19 Feb 2023 13:18:57 GMT

The IRS does not seem to have provided any specific guidance on this, but I agree with fanfare. I would consider all payments made until the limit is reached to be deductible, so I would report that actual amounts of SALT paid per quarter until the quarter where the total would exceed $10,000 and only then limit the total to $10,000. For example, if the actual amounts paid were $4,000 each quarter, I would report $4,000 for Q1, $4,000 for Q2, $2,000 for Q3 and $0 for Q4.

Re: Form 2210 Annualized Income - How to annualize itemized deductions?

fanfare — Sun, 19 Feb 2023 17:47:19 GMT

It is INTERVAL 1-4, not quarter 1-4

The SALT amounts would be I-1 $4000, I-2 $8,000 I-3 10,000, I-4 10,000

then add other applicable deductions for that interval.

It think it's pretty clear, without additional "specific guidance"

@dmertz

Re: Form 2210 Annualized Income - How to annualize itemized deductions?

dmertz — Sun, 19 Feb 2023 18:00:25 GMT

Thanks. I was indicating the amount of additional SALT deductions each quarter instead of the running totals to be entered on Schedule AI.

Re: Form 2210 Annualized Income - How to annualize itemized deductions?

stife94 — Tue, 21 Feb 2023 20:15:19 GMT

If you count $4000 in the first quarter it is going to get "annualized" to $16,000 which already exceeds the cap.

I did the numbers both ways over the weekend. By the second period the annualization factor of 2.4 was making my "deductions" more than double the year-end allowable amount . Fortunately, annualizing my income got rid of most of the penalty.

Re: Form 2210 Annualized Income - How to annualize itemized deductions?

dmertz — Wed, 22 Feb 2023 20:21:08 GMT

"If you count $4000 in the first quarter it is going to get "annualized" to $16,000 which already exceeds the cap."

That's a good point. I forgot that the amounts get annualized by multiplying by the annualization factor. Perhaps it makes more sense to put an upper limit on the SALT deduction each quarter of $10,000 divided by the annualization factor: $2,500 for Q1, $4,167 for Q2, $6,667 for Q3 and $10,000 for Q4.

Re: Form 2210 Annualized Income - How to annualize itemized deductions?

stife94 — Wed, 22 Feb 2023 20:08:01 GMT

This is what I will end up doing. And I just noticed that the sum of my third period deductions (i.e. including all property and state and local income taxes without cap) before annualizing exceeds my allowed deductions for the entire year (line 4 of column C exceeds column D which is autogenerated by Turbo Tax). This generates an error in the program.

Re: Form 2210 Annualized Income - How to annualize itemized deductions?

kkmrhktax — Mon, 05 Feb 2024 00:45:57 GMT

Tax Year 2023 was the first time I tried using the annualized method since I stopped working. I'll admit, I don't know if I did this correctly. I didn't try using the What-if option in Turbo Tax 2022 to see if I could use the annualized method for 2023 estimates.

I created an Excel workbook that has multiple linked worksheets for Federal Estimated Tax Worksheet 2-1, 2-5, 2-7, and 2-8. Also, I added and linked worksheets with income interest, dividends, capital gains, and all itemized deduction line items. I tried to mimic as many federal and state forms as possible. Since I have qualified dividends, I used Annualized Income Worksheet 2-7 and 2-8. I track just about everything in Quicken, so I can export the relevant transactions into the appropriate worksheet. As discussed in this thread, , I limited Schedule A line 5 SALT taxes to $10,000 for each reporting period (end of 3/31, 5/31, 8/31, and 12/31). Due to the timing of our property tax payment, the $10K limit was hit during the period ending 8/31. Also, used the 7.5% threshold for Schedule A medical expenses for each reporting period.

Hopefully this is correct. I'll compare to TT2023 annualized income method when I receive all forms.

Do you think I'm on the right track?

Also, I'm trying to learn about the Alternative Minimum Tax as I might need to take some large long term capital gains in 2024. Any comments about incorporating AMT into the Annualized Income method? I am trying to add Form 6251 into the workbook, but I'm not sure how to do this correctly.

Side note: There were some other threads about earlier versions of TurboTax calculating short term carryforward losses incorrectly. I'll manually deal with this if needed.

Re: Form 2210 Annualized Income - How to annualize itemized deductions?

fanfare — Mon, 05 Feb 2024 02:31:55 GMT

Schedule AI instructionw were written before SALT limitations, and not updated.

We blue states hope this all EXPIRES on time, or better, repealed now.

Re: Form 2210 Annualized Income - How to annualize itemized deductions?

stife94 — Mon, 05 Feb 2024 19:18:57 GMT

For 2022 and 2023 I ended up doing what I had written about last year: Added up my SALT amounts for each period and wrote a formula in Excel to take the smaller of my SALT amount or $10,000/X with X being the annualizing factor. For me, the important thing about annualizing is that I get a disproportionate amount of taxable income in the fourth quarter and want to wait until the last minute to pay. I just didn't want to mess up annualizing the deductions and raise a red flag. Anyway, for 2023 it turns out I'll be taking standard deduction.

For 2023 I tracked taxable income including qualified dividends and long term capital gains in Excel and then went to Turbo Tax 2022 and used the estimate tax tool for 2023. I made changes each quarter as needed. If you put in the payments you already made it recalculates the next quarter. Then in January 2024 I used TT2023 to figure out the fourth quarter payment. I didn't have all of my 1099s but I could figure out the amounts based on what I had already tracked during the year.

Can't help you with AMT.