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New Member
posted Feb 21, 2021 10:25:47 AM

Form 2210, TurboTax uses annualization factors for qualified divs in AI method

Hi.  In computing taxes due for each period of the Annualized Income method of IRS Form 2210 (Schedule AI, Part I, Line 14), it is apparent from my calculations that TurboTax is applying annualization factors (4, 2.4, 1.5, 1) when computing the totals for qualified dividends and capital gains on line 4 of the of Qualified Dividends and Capital Gain Tax Worksheet.  While this makes some sense, I see nothing in the IRS instructions for Form 2210 or anywhere else that allows this annualization of the qualified dividends and capital gains totals.  I would appreciate some information or a link to IRS guidance that reassures me that TurboTax is doing this appropriately.  Thanks.

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Expert Alumni
Feb 25, 2021 2:26:21 PM

This is the link to IRS' Instructions for form 2210  Instructions for Form 2210

 

Annualized income can be calculated by multiplying the earned income figure by the ratio of the number of months in a year divided by the number of months for which income data is available.