Are you using the CD/download product or the Online product? I am having trouble creating a test for this using the CD/download product.
I'm using the CD/Download version. I just updated the software. It's Turbo Tax Basic. If I enter a number in 4c any larger than in 4d I get the error. I'm attaching the screenshot.
Here it is 3 years later, and I am encountering the same issue. I use TT Deluxe, desktop version. The error message now says, "Form 2210AI: Line 4 is not between the prescribed upper and lower limits" but it's the same issue.
My situation is basically the same as the OP -- my itemized deductions in period 3 are legitimately greater than in period 4 because I receive nearly 90% of my income in period 4. This isn't an error. So how do I proceed?
I entered a mock return in TurboTax desktop to try to recreate the error you are seeing, but could not do so.
My test case had over 90% of the income earned after 8/31/25 and all of the itemized deductions claimed before 8/31/2025, but did not get an error.
You may want to check your entries for Schedule 2210 AI to be sure that none of the entries for line 4a, 4b, or 4c, exceed the amount on 4d.
If you aren't able to resolve this, you could send a screenshot and any other details you wish to share about the issue in a response - just be sure that none of your personally identifiable information is present in the screenshot.
Thanks for the reply. The value for 4c is indeed larger than the value for 4d. This is valid. My medical deductions are much higher in column (c) vs column (d) because my income is so low in column (c). The 7.5% AGI medical deduction limitation means that I can't deduct as much of my medical expenses in column (d). All valid, so isn't this a bug with TT? (screenshot below)
No, this is not a bug with TurboTax. Based on this, line 4d represents your total itemized deductions for 2025. Because of that, line 4c for the period of 1/1/2025 to 8/31/2025 cannot be greater than your itemized deductions for all of 2025. If all of your itemized deductions were taken by 8/31/2025, the entry on 4c will have to be equal to 4d.
When you use the annualization method to reduce or eliminate a penalty, keep in mind that each of the columns represents a time period from the beginning of the year to either 3/31, 5/31, 8/31 or 12/31. For instance, in your screenshot, line 1b is zero - unless you had a loss of all the income from line 1a for 1/1 to 3/31, then 1b for 1/1 to 5/31 should usually be equal to or greater than line 1a (barring a loss of income).
You can't employ the 7.5% AGI limitation for medical expenses to justify having an increased medical expense deduction for a given time period for purposes of this form. You will need to divide up your medical expense deductions for each of the time periods based on the total medical expense deduction you got from Schedule A line 4.
Most of my income is from investments. I did some tax-loss harvesting in April to offset LTCG, though your post reminds me that I need to be sure I'm not using more than $3,000 of losses to offset dividend income in periods (a) thru (c).
Going back to how to annualize itemized deductions, I have a few questions:
You said, "You can't employ the 7.5% AGI limitation for medical expenses to justify having an increased medical expense deduction for a given time period for purposes of this form." Why not? Isn't that the point of annualizing? Has the IRS provided guidance on this?
You said, "You will need to divide up your medical expense deductions for each of the time periods based on the total medical expense deduction you got from Schedule A line 4." How? Take the year-end medical deduction and apply the annualization ratios in reverse? If that's the correct way to handle it, then it seems TT would just do the calculation automatically. It also seems to go against the very intent of the form -- calculating tax liability based on factors known at the end of each period. Or are you suggesting something else?
Put another way: on Aug 31 (end of period c) I don't know what my year-end income will be, I don't know what other deductible expenses I may have, etc. So how can it be correct to use a value that isn't known until the end of the year (i.e., Sched A line 4) to calculate tax liability on Aug 31? (It especially doesn't make sense if you think of it from the perspective of using the annualization methodology to make estimated tax payments, but I don't want to get off-track.)
I'm not being argumentative; just trying to understand. Thanks
On Schedule AI in Part I, each column represents a given time period for the year. By having a greater amount of itemized deductions in column c for 1/1 through 8/31 vs column d for 1/1 through 12/31 would imply that you had a negative amount of itemized deductions from 9/1 through 12/31 which is not possible. You just simply cannot have more itemized deductions for 8 months of the year than you can for all year. When you deduct medical expenses on Schedule A the deduction is based on your AGI for the entire year, so you can't claim medical expenses on Schedule 2210 AI above the amount you were able to claim on Schedule A.
I looked for IRS Instructions for Form 2210 and oddly enough, the instructions for Schedule AI start with lines 1 and 2 and then skip to line 6.
While the IRS instructions don't provide specific guidance for Line 4, I just noticed that intro section for Schedule AI (page 😎 says:
"4. For each period shown on Schedule AI, figure your income and deductions based on your method of accounting. If you use the cash method of accounting (used by most people), include all income actually or constructively received during the period and ALL DEDUCTIONS ACTUALLY PAID DURING THE PERIOD." (caps added)
Yet you said, "You will need to divide up your medical expense deductions for each of the time periods based on the total medical expense deduction you got from Schedule A line 4." Doesn't that contradict the IRS instructions?
Ray you said "You just simply cannot have more itemized deductions for 8 months of the year than you can for all year." Actually you can have more ALLOWABLE itemized deduction for 8 months of the year than the full calendar year. This is because medical expenses are subject to 7.5% of your AGI. If you have not had much income through the first 8 months of the year and you've had high medical expenses, you will be able to deduct most or all of your high medical expenses based on income for the first 3 periods. HOWEVER if you have a high amount of income in the 4th period which is common with mutual fund dividend distributions, and you re-test your medical expenses against the 7.5% of AGI for the FULL year you will no longer be able to deduct as much of your medical expenses so it ENTIRELY POSSIBLE for your 4th quarter itemized deductions which are allowed to be lower than what they were in the 3rd period. It would be nice if TT would allow us to report our information to the IRS in an accurate manner.