Estimated Taxes

[kayak]

Has something changed this year?  In over 20 years I never had to complete Form 2210 manually. I use the topic method each year and this year I got 14 errors and I'm asked to input quarterly dates and amounts for capital gains distributions, in lines 7, 15 and form 1040 line 3a, each by quarter in form 2210 AI  "annualized income".    I never had to input before.  What is going on??

I've always had dividends and capital gains and losses in the past, and had to pay a penalty for underpayment of taxes before.  But I NEVER had to complete  form 2210 manually before.   Underpayment penalty was done automatically by TT, but not this year. 

I put in all the required information for each 1099-D I received and 1099-B just as before.  This year I even downloaded my 1099's from my financial institution to see if that would clear it up but it has not. 

I'm lost!

[gloriah5200]

You have probably used the short method in years past instead of the annualized installment method you are using this year.

If all the income and withholding and estimated taxes paid were earned and paid evenly throughout the year, you should be able to use the short method instead of having to complete the annualized method.

For additional information, please refer to the following link:

IRS Instructions for Form 2210

The line-by-line instructions are very helpful for how to complete the annualized installment method of Form 2210.

[Edited 03/01/2021|6:45 pm pst]

[kayak]

Thanks Gloria,
You are the only one that has given me a definitive answer!
Check the records, I've called many times and never got help; several gave up because they could not complete the instructions for 2210 "and promised call backs from experts that never came ". I even had a CPA tell me to "wing it" or "guesstimate the answers"!
It is so aggravating and not what I've come to expect from Turbo Tax.
The 11 to 14 errors in 2210 require information that Turbo Tax already has in my return, I don't understand why I'm asked to copy numbers from schedule D, or put in trade dates that TT already has. I have a very simple return with one small investment in a automated fund that automatically trades in other funds. All those trades have been put in my return. Is Turbo Tax unable to support those funds? If so, they should tell us up front, and not state the Turbo Tax supports 2210 when it doesn't fully. Aren't these calculations the sweet spot for companies like Turbo Tax?

If Turbo Tax unable or unwilling to complete the calculations for 2210 for trade activity (when they have all the required data) please tell us up front.

This question requires an answer from Turbo Tax. To whom should I direct this question? Or, is this more suitable for public forum discussion on other platforms?

And, please tell me how to use the short method to complete 2210. No one else even mentioned that to me as an option in my10 days of calls for help.
Thanks much for your response.

[DianeW777]

The Short Method is described in the Form 2210 Instructions and is printed here for your convenience. As you can see it is used in specific circumstances.

.

Part III—Short Method - 

• You can use the short method only if you meet one of the following requirements.
  • • You made no estimated tax payments for 2020 (it does not matter whether you had income tax withholding).
  • • You paid the same amount of estimated tax on each of the four payment due dates.   

If you don’t meet either requirement, figure your penalty using the regular method in Part IV of Form 2210 and the penalty worksheet in the instructions.

TurboTax wants to be certain that the income is entered when you actually received it during the annualized method.  For example, they don't know by the W-2 entry when the wages were earned, or many other income documents. For these reasons it's important that you answer the questions about when the taxable income was actually received .

It can be difficult and I understand your experience. The key to the annualized method and when it may be beneficial is when you have a large amount of income in a period that is much later rather than earlier in the year.  

[kayak]

Thanks Diane,

Would not Turbo Tax walk me through those choices as they do for all other tax decisions?  i.e., I don't have to read the instructions for 1040 or Schedule D etc.     Is there a process within TT to use the standard method?

Thanks

[DianeW777]

Yes. You can always choose the standard method. 

When you go through the underpayment penalty section (Form 2210) you should say 'No' to the annualized method.  Then TurboTax will calculate the penalty based on the an average income for all period and you don't have to do anything else. If you income is relatively averaged, then you can be sure the penalty is accurate.

1. Sign in to TurboTax and open or continue your return.
2. Search for underpayment of taxes.
3. Select the Jump to link in the search results.
4. The Underpayment Penalties screen will display the penalty amount. Select Continue to review this section and make any needed adjustments.
   • Note: If you see No Underpayment Penalty, you either haven't entered your income and/or estimated tax payments yet, or you aren't subject to an underpayment penalty.

(Optional) Keep going, and when you get to the Annualized Income Method screen, answer No 

[anilj]

The problem I also see is that TT asks for what the total AGI was for the year. This AGI includes the capital gains. It then goes on to ask what the capital gains are over the quarters (I guess this, because LTCG are taxed differently). But why does it include those gains in the AGI!?

[MaryM428]

Adjusted Gross Income (AGI) is defined as gross income minus adjustments to income. Gross income includes your wages, dividends, capital gains, business income, retirement distributions as well as other income. Adjustments to Income include such items as Educator expenses, Student loan interest, Alimony payments or contributions to a retirement account. Your AGI will never be more than your Gross Total Income on you return and in some cases may be lower. 

Capital gains are part of AGI.