Michigan 2210 annualized method

[matto1]

I am in a penalty situation for both Federal and Michigan state taxes.

On the Federal side, I was able to a "Tax Withheld Smart Sheet" the amount of actual withholdings by certain time periods and this reduced my penalty by about 40%.

The Michigan 2210 appears to have a similar entry, if I used "annualized income installment method." But the lines I would enter, line 10 - "estimated tax paid and withheld," does not allow me to enter the tax withheld, it's just 25% of my annual withholding in each column.

Is there a way in which I can do this to the amount of actual withholding?

[KeshaH]

Withholding is typically treated as withheld ratably throughout the year. The withholding is divided by 4 and the result is entered in each of the columns. If you made estimated payments instead, these payments would be applied to the period in which they were made.

When you use the annualized method, you'll scroll down to the annualized income worksheet and enter the income earned in each quarter to determine what your required minimum payment would be based on the amount of income earned during that period.

[pinebay1]

I also have the same difficulty like @matto1 describes.  I need to annualize both income AND withholdings paid in my Michigan return

I used the "Tax Withheld Smart Worksheet" in the Federal Form 2210 to annualize withholdings paid in each quarter. This worked seamlessly with my Form 2210-AI annualized income. It was really helpful!

The MI Form 2210 has no "Tax Withheld Smart Worksheet". Why not? The Michigan Department of Treasury does not force taxpayers to consider one-fourth of withholdings paid on each due date if they can document the dates the tax was withheld (page 4 in 2024 MI-2210 instructions).  TurboTax version [phone number removed] only applies one-fourth of total withholdings paid on each quarterly due date. It doesn't accommodate the alternate method that Treasury allows.

What does it take to incorporate a "Tax Withheld Smart Worksheet" in the MI 2210 that mimics the function available in the Federal 2210?  I suffered the same difficulty with my Michigan withholdings in 2023. Currently, the only resolutions I am aware of are disappointing:

1) override a lot of cells in Part 1 of the MI 2210 (I cannot choose to have Treasury figure the interest/penalty because that prevents TT from attaching the Form 2210 Treasury needs to complete their calculations), or

2) pay a penalty which I do not owe (and which the Treasury does not detect and correct).

I would be grateful if the development team replicated the Federal Form 2210 "Tax Withheld Smart Worksheet" feature in the Michigan Form 2210. 

[DR8539]

I was lucky to find this posting that described my similar situation.   I had also stumbled upon the right-click cell to Override in the MI-2210.   It is a shame that the rest of the worksheet does not update to the overridden withholding values and I had to figure and override/enter those myself.   I do not see a way to "Add supporting details..." or attach required documentation (eg: paystubs showing withholding).

Intuit:  Is this something that could be considered to be improved?

Michigan: I wish you would update the annualization procedures to match Fed.

I also recall having to manually trigger the Fed 2210 because unlike the State I was not alerted to the penalty and offered a similar "Try annualizing?" question.   Did I miss something?

[LenaH]

Using the step-by-step screens for the Michigan return, you should have seen a screen titled Annualizing Your Income if you had an underpayment penalty. You may have not seen this screen if you elected to have Michigan bill you, rather than calculating the penalty with TurboTax. 

Likewise, you would have encountered a screen in the federal step-by-step to review your underpayment penalty. Once you elect to review your underpayment penalty, the screens will populate. 

@DR8539 

[matto1]

My issue is that my payment of taxes was front loaded due to when I received an annual bonus, and I see no way to show when I paid taxes. I can do that for federal, but I don't see any option to do it for state. I want to be able to apply the state taxes according to when they were paid. Is there a way to do that?

[LenaH]

Per the MI-2210 instructions, taxpayers who annualize must also enter 25 percent of tax withheld in each column of the MI-2210, li.... 

However, if you are using TurboTax Desktop, you can go into Forms mode and enter your withholding amount on Line 10. See the below example. 

@matto1 

[DR8539]

...Additionally I had to right-click on those fields in 2210 Part1 Line 10 and choose "Override" so that I could enter data.   After that, TurboTax did not recalculate all the rest for me.  I had to manually compute values and individually override all dependent fields.   In my case, the penalty/underpayment went to zero, but the previously computed interest lingered until I cleared it manually in the Part 2 "INTEREST" worksheet.

[DR8539]

On TurboTax 2025 Desktop Windows I was not offered a chance to review Federal underpayment penalty.  I did receive this notice for the State of Michigan return when I got to that point.   I only noticed the Federal penalty at that point as I was looking at the year-over-year comparison summary.

[matto1]

Thanks.

I have TurboTax Desktop Deluxe. I am not able to edit line 10 of Form 2210 -- that was my first approach,  but I couldn't do it. But yes, that's exactly what I want to do.