Form 2210

[ibjim88]

There’s an update for the TurboTax bug you encountered in the Mac desktop program: 

Form 2210, Schedule AI, Part 1, line 7: not adding in Form 1040, Line 12b, Charitable Deduction, ($300-600).

We’re happy to inform you (via e-mail, dated 03/24/22) that we’ve updated TurboTax and resolved the issue you experienced.

The updated version is REV03/19/22 TTMac, as noted in the fine print at the bottom center of the printable file copy forms.

[ibjim88]

Here are the current (03/25/22) IRS instructions at the top lines of the 2021 Publication 505’s Worksheet 2-8. Qualified Dividends and Capital Gain Tax Worksheet for line 12 (the tax computation) of Worksheet 2-7 Annualized Estimated Tax Worksheet:

“Note. To figure the annualized entries for lines 2, (qualified dividends), 3, (capital gains), 5, and 6 below, multiply the expected amount for the period by the annualization amount on line 2 of Worksheet 2-7 for the same period.” 

As of March 24th, 2021, the turbo tax programers for REV 03/19/22 of the desktop Mac version, have decided NOT to annualize the capital gains when calculating the amount to include in line 3 of Worksheet 2-8. This is inconsistent with their treatment of qualified dividends, line 2 and is illogical since they annualize the capital gains when calculating the Annualized AGI, line 1 of the same Worksheet.

This has the effect of over estimating the the estimated tax due for the first three periods, and consequently may impact the penalty calculation.

Although this is not a bug nor an arithmetical error, but rather a conscious election, it has been called to their attention and is scheduled for review, but not likely to change for tax year 2021, according to an opinion of one of  TT's  CPAs. It is not possible to override the TT entries. The only workaround now is to print out all the other forms except 2210 and page 3 of the 1040, (lines 37 and 38, the penalty), fill in the proper amounts and file by mail if the penalty correction is significant. 

[Tax4fp]

@ibjim88 

As I have noted in several other forums, a simple workaround to get 2021 TT to properly calculate the effect of capital gains in the first three periods for Form 2210 and 2210AI is to simply report the total of the capital gains and qualified dividends in each of the first three periods as qualified dividends and enter zero for capital gains in each of these periods.  Since TT scales the value in the qualified dividends entry for each period, this will result in TT correctly calculating the effect of capital gains and qualified dividends per IRS instructions and result in a proper underpayment penalty calculation for each period.  The IRS accepted an e-filed return with this workaround.  Note that since scaling factor for the full year is 1, the fact that TT actually shows the capital gains as capital gain entry for the fourth period has no impact on Form 2210 calculations.  Using this workaround will allow you to e-file Federal return, rather than having to mail in forms (the IRS is way behind in processing mailed returns from multiple years, so they would much prefer that you e-file).  

[ibjim88]

An elegant solution!

Should have thought of it myself.

Thanks!

[Tax4fp]

Update on 4/20/2022 finally fixed the tax calculation error in Form 2210AI line 14 (a)-(c) where LTCG was not being scaled each period as IRS required for these calculations.  Too late to help anyone who filed on or before due date for 2021 federal taxes.

[ibjim88]

Confirmed. Case closed!

Considering the literally thousands of forms, federal and state which may have to be re-programed if they change from year to year, it'a no wonder that TT benefits from informed constructive criticism. Thanks again for your input Tax4fp!