Annualizing self-employment income on PA state return?

[dlc3172]

I'm self-employed and pay quarterly estimated taxes. My income fluctuates throughout the year. On my federal return, TurboTax Deluxe allows me to annualize my income to avoid an underpayment penalty for estimated payments that were too low based on last year's total income (I think that's why). But TurboTax doesn't mention annualizing for my Pennsylvania state return. Instead, I have to pay the penalty. Does PA not allow annualizing? Or does TurboTax just not support this?

[IsabellaG]

Pennsylvania does allow you to annualize your income. As you go through the PA return, if you would normally owe an estimated tax penalty, you will be asked if you want to let PA calculate the penalty. Say no, and you'll see questions to see if you meet any exceptions, including the screen Let's See If You Earned The Money Unevenly. See the screenshot below. You can then enter your income by period to see if you still will be liable for a penalty.

[Edit 04/05/18 7:41 PM]

[dlc3172]

That screen does not appear for me. I'm simply told at the end that I owe a penalty and that I can either figure it myself or let Pennsylvania figure it for me. Your screenshot says "TurboTax Home and Business," but as I mentioned I'm using Deluxe. That must be the difference. Luckily, the penalty is only $5, less than upgrading would cost me.

[IsabellaG]

@dlc3172 That's not true. This is available in Deluxe. I'm editing my answer to include screenshots from Deluxe.

I think what you're doing is saying "yes" on the screen that says "Let's Have Pennsylvania Calculate the Penalty" when you should say NO. And proceed with the screens carefully, and you'll get to the uneven income screen.

[dlc3172]

After clicking "No" on your first screeshot, I get a screen that shows the underpayment penalty (similar to your second screenshot), but no message that says "Do you want to see if you qualify..." and only a button that says "Continue" which brings you out of that section.

[IsabellaG]

On the screen that says "Let's review your underpayment penalty", click Yes. You will be taken through every possible exception.   I'll add all of the screenshots for what you would see with Deluxe, and I hope it helps. I have not made entries in each screen, which you should do depending on your situation.

[dlc3172]

I don't get any of the screens you show after the first screenshot. When I click "No", I just get a screen that shows the penalty amount and then a Continue button, which exits me from the section.

[IsabellaG]

Try updating your Desktop program, and finally try deleting the PA return and starting it fresh. Hopefully, you'll see the same screens. You can delete your state return by clicking File while you are in the Federal section and clicking Remove State Return.