Form 2210 AI line 14 column a, b and C.

[mcd3]

The tax calculation on form 2210 AI line 14 in columns (a), (b) and (c) is incorrect. This is an annualized calculation and the amount for gross income (including qualified dividends and capital gains) has been annualized. But when doing the tax calculation, the 15% capital gains tax rate should be applied against an annualized capital gain and qualified dividends amount. However, Turbotax is only annualizing the qualified dividends amount and not the capital gain amount. Too much of the annualized gross income amount is getting a regular tax rate and not the capital gain tax rate.

[MichelleLO]

Please make sure that your TurboTax software is updated to the latest version. Please see the below help article for assistance with this. If that doesn't resolve the issue, please comment back.

How do I update my TurboTax CD/Download software program?

[mcd3]

Just updated TurboTax and the error in the calculation is still not corrected.

[grigs681]

I am having the same issue.  TurboTax is calculating my tax at over 30% even though the income was long-term capital gains.  This is causing me to have a penalty.  

[grigs681]

THE PROBLEM AND THE FIX

After 2.5 hours on the phone with TurboTax (TT) help, I got nowhere.  I have been using TT since 1995 and while there have been issues, this one should have never slipped through any level of testing.

I then bought and downloaded a copy of another tax software that would let me see more about what is going on with Capital Gains and Qualified Dividends calculation on Form 2210AI.  After completing my taxes on the other software it showed me where TT is wrong and how to fix it.

Line 14 (your tax) gets its value from Line 13.  Line 13 is viewed as ordinary income until it uses the values in the Capital Gains Tax Computation Smart Worksheet (located just above Line 14 when using Forms).  The problem lies with the Annualization amounts (Line 5).  It multiplies your income by this level, which is correct, but it does not use that same factor in calculating your Capital Gains or Qualified Dividends.  On the other tax software I purchased it worked fine but not on TT.  The only fix I have found is to multiply your Capital Gains, (Line B in the Smart Worksheet) and your Qualified Dividends (Line E in the Smart Worksheet) by the same factor.  These are 4.0 in 1Q and 2.4 in 2Q and 1.5 in 3Q and 1.0 in 4Q.  When I did this, the annualized income/penalty calc was the same on TT as it was on the other tax software and matched my tax spreadsheet very closely.

I am not a tax professional and did most of this work between midnight and 5AM so take this information for what it cost you (nothing) but I do think this shows where the TT calc is wrong and how to fix it.  I ran an error check on both software programs and both came back fine.

[mcd3]

Just calculate the correct amounts and input them using the override feature 

[mcd3]

Just calculated the correct amounts and put them in using the override feature.

[whodiini]

Using override causes turbotax not to be able to efile. You can only print and mail the returns.  Given the staffing issues at IRS, you will wait a long time for your return to be processed.  So that is not a solution. 

[greg_s]

Qualified Dividends (Line E in the Smart Worksheet) are annualized correctly; the problem is with Capital Gains, (Line B).   This needs to be annualized manually.     OR another workaround is to combine the two amounts and put the total in line E and zero in line B.  (I only have entries in B and E.)

[mcd3]

That's another way to fix it. I am just overriding the incorrect amount calculated by Turbotax. I owe money and never efile (will not put a document over the internet with my SSN in it) so they can take as long as they like to process it.  Turbotax must not read community comments, otherwise they would have fixed this and I started pointing this problem out 2 months ago. Did have to file this form in 2017 and  they did it right that year.

[uniqueusername]

you are, of course, correct. i spent over an hour trying to convince a TT staffer and got nowhere. THEN this morning i googled the issue and found your post. and am hugely grateful. 

i am using TTdesktop on windows.

it looks like the error causes excessive q123 estimated payments, so they are not putting themselves at risk of paying for your/my penalties if it was the reverse. too bad, that would have been a stimulus to change.

in any case, they will get a note from me to this effect, and i may actually even send it by postal mail in addition to posting/emailing it to them

many thanks for reporting this.