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withcare
Level 2

Annualized income installment method in online version (premier)

My salary compensation and, thus, my maximum withholdings, are a small fraction of my compensation. For 2020 I was covered by the safe harbor rule. For 2021, I'll need estimated tax payments.

 

I tried using my preliminary numbers to compute them. TurboTax Premier (web version) gives me four identical payments. My income, though, varies from quarter to quarter. Last year, the best quarter was 40% higher than the worst. I want to use the annualized income installment method so I can pay a more accurate amount each quarter. I don't mind doing the extra work.

 

I don't see an option. Anything else I find in the fora and on the Internet seems to refer to a desktop version of TT. Am I missing something? Am I out of luck? I am also wondering if I'll be prevented from computing estimates from scratch after I file on April 15.

 

Thank you.

1 Best answer

Accepted Solutions
DianeW777
Expert Alumni

Annualized income installment method in online version (premier)

The annualized income is used to reduce penalties on the current year underpayment of estimated tax.  TurboTax can determine what you should pay in estimated tax based on the current tax year or the figures you enter when asked about the new tax year. However, it will provide equal installments throughout the year. 

 

If you expect, in 2021, to owe at least as much as your tax liability is for 2020, then this is the best amount to use to eliminate any penalty for 2021. TurboTax will let you choose this option and divide the payments equally throughout the year.

 

If you expect to owe less, then you can determine each quarter what you should pay for that quarter. 

 

Using the TaxCaster, Income Tax Calculator, each quarter will allow you to determine the amount due at that time.  This will help you determine the amount you should pay each quarter.

View solution in original post

2 Replies
DianeW777
Expert Alumni

Annualized income installment method in online version (premier)

The annualized income is used to reduce penalties on the current year underpayment of estimated tax.  TurboTax can determine what you should pay in estimated tax based on the current tax year or the figures you enter when asked about the new tax year. However, it will provide equal installments throughout the year. 

 

If you expect, in 2021, to owe at least as much as your tax liability is for 2020, then this is the best amount to use to eliminate any penalty for 2021. TurboTax will let you choose this option and divide the payments equally throughout the year.

 

If you expect to owe less, then you can determine each quarter what you should pay for that quarter. 

 

Using the TaxCaster, Income Tax Calculator, each quarter will allow you to determine the amount due at that time.  This will help you determine the amount you should pay each quarter.

View solution in original post

withcare
Level 2

Annualized income installment method in online version (premier)

I don't know what my liability will be, because the 60-80% of my total income comes from stock and you can't really trust Wall Street geniuses. I hadn't seen TaxCaster before, I might use that, but it doesn't seem to help with state taxes (I live in one and work in another... yay).

 

Thanks for your help! 

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