Avoiding penalty for underpayment of taxes

[thomasp5154]

As a retiree, I find it necessary to make estimated tax payments.  I do so 4 times each year after reviewing my income each quarter and remit the necessary payment to the IRS.  At the fourth quarter of the tax year, I determine how large an IRA withdrawal I can make without exceeding the IRMAA threshold which would generate a loss of future social security benefits via a Medicare penalty.  However, the TT software does not realize my income and estimated tax payments were done accurately for the first three quarters and the big increase in my income was the result of the IRA w/d in late December which I covered the tax liability on January 15th with my 4th quarter estimated tax payment.  The TT program assumes I did not pay correctly across the entire year and hits me with a penalty for underpayment of estimated taxes because it appears I am playing catch-up on the final payment for the tax year.  Where in the Form 1040 TT program while I am doing my taxes can I address this issue to avoid the TT program calculating an estimated penalty for underpayment?  Thanks so much for some help. 

[dmertz]

You must annualize income on Schedule AI (Form 2210) to treat the income as received when actually received.  TurboTax will offer the opportunity for you to do so.

[thomasp5154]

Thank you.  I know Form 2210 deals with this issue.  I don't doubt your answer regarding TT offering the opportunity.  I must have simply missed it.

Thanks again

Tom P

[VolvoGirl]

2210 is  under

Federal or Personal (for Home & Business Desktop)

Other Tax Situations

Additional Tax Payments

Underpayment Penalties - Click the Start or update button

If you have the desktop program you can switch to Forms Mode (click forms in the upper right (left for Mac)) and open the 2210 form.  If the 2210 doesn't show up in the left column, click on Open Forms at the top of the left column.  Type 2210 in the search box and open the 2210 form.  Check box C to let the IRS calculate it.

[baldietax]

once you have input all your info and total AGI is correct you can also trigger the AI process on EasyStep under "Other Tax Situations" and "Underpayment Penalties" will lead you thru the questions to provide the cumulative AGIs for 3/31, 5/31 and 8/31 needed to drive the Form 2210, but likely want to review what is happening in Forms view also.