Concerning if I should annualize my return for fed and state. I assume I would have to annualize both to lessen the tax penalty assigned by both? Will the program let you annualize just the federal, and not the state return? If I decide after checking option to annualize, can I back out of this later, and decide not to in the program? Any idea how many screens is involved in doing this? I know I have to calculate income to each quarter, but do I have to do the same for interest and dividend income, and money made with exempt bond interest, etc? If annualizing the returns is very labor intensive, I don't know if it's worth it in my situation? My federal AGI, is much more than my state of Mass amount shown for the prepopulated field in annualization program for Mass. Have any idea why this is so?
@sonzoil The annualization has to be entered to reduce the penalty. If all of your income lands in December you should be able to reduce your penalty. If you change your mind and decide not to annualize you just need to go back and change the check box from annualize to don't annualize and you're all set.
As for why Massachusetts income is lower than federal it would depend on what type of income you have in your return. Massachusetts has different rules for what is taxable than the federal government, as well as what is deductible.
Besides income amounts, are there fields asking for deductions, taxes paid in certain months, etc, or is it just income, and dividends each quarter?
Yes, when you annualize your income on Form 2210, you have to report your taxable income by quarter and you also have to report your credits and deductions by quarter.