Part III – Annualized Income Installment Method
If your income varied during the year, you may be able to lower or eliminate the amount of one or more required installments by using the annualized income installment method.
Use Part III to figure the required installment amount to enter on Worksheet II, Regular Method to Figure Your Underpayment and Penalty, line 1 (page 4).
Complete line 1 through line 16 to figure your current year tax, per quarter, based on your income as you earned it. Then, complete line 17 through line 23 to figure your required installment for each quarter. (The total of all amounts entered on line 23 should equal the amount from Part II, line 6.)
If you use the annualized income installment method for any payment due date, you must use it for all payment due dates. To figure the amount of each required installment, Part III automatically selects the smaller of the annualized income installment or the regular installment (increased by the amount saved by using the annualized income installment method in figuring earlier installments).
If you are filing Form 540NR, see Form 540NR Instructions for Part III at the end of this section.
Line 1 – Figure your total income minus your adjustments to income for each period from
January 1, 2019 to the ending date of each period (the amounts are cumulative). Include your share of partnership or S corporation income or loss items for the period.
Line 2 – Form 541 filers. Do not use amounts shown in column (a) through column (d). Instead, use 6, 3, 1.71429, and 1.09091, respectively, as the annualization amounts.
Line 6 – Multiply line 4 by line 5 and enter the result on line 6. Your annualized itemized deductions are limited if, in any quarter, federal annualized income (use Federal Annualized Income Worksheet below) is greater than:
- $401,072 (married/RDP filing jointly or qualifying widow(er)).
- $200,534 (single or married/RDP filing separately).
- $300,805 (head of household).
Use the following worksheet to figure the amount to enter on Part III, line 6 for each period federal annualized income reaches the above amounts.
- Enter the amount from Part III, line 4. . . 1_______
- Add the amounts on federal Schedule A (Form 1040 or 1040-SR), line 4, line 9, and line 15 plus any gambling losses included on line 16 . . . 2_______
- Subtract line 2 from line 1 . . . 3_______
- Enter the number from Part III, line 5 . . . 4_______
- Multiply the amount on line 1 by line 4 . . . 5_____
If the amount on line 3 is zero, stop here and enter the amount from line 5 on Part III, line 6.
- Multiply the amount on line 3 by the number on line 4 . . . 6_____
- Multiply the amount on line 6 by 80% (.80) . . . 7______
- Enter the amount from Federal Annualized Income Worksheet, line 3...8____
See Link below: Instructions for Form 5805
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