Form 2210ai

[glashfordjr]

On form 2210ai, line 16, it says to enter other taxes for each payment period.  I know the total (say $2000) which comes from Form 8960, Net Investment Income Tax.  How do I prorate the $2000 for the four time periods.  Any help would be greatly appreciated.

[AlexanderS08]

If the annual amount is $2,000, I would recommend you prorate it as $500 per quarter. Put $500 for each of the four periods.

[glashfordjr]

I realize I could just divide by four and use $500, but that is not the correct way to do it.  However it may be the only way.  If dividing by four was correct, why wouldn't Turbotax do this automatically or the IRS instructions say to do this.  The tax on Net Investment Income does not come into play until your income reaches a certain threshold level which in my case didn't happen until sometime in the fourth time period.  The lack of instructions amazes me and line 16 doesn't make any sense.

[JohnW222 · Accepted solution]

You're right that a pro-ration of $500 per quarter isn't correct; it lacks precision and, as you note, the IRS' instructions for the line are not helpful.

The best way to correctly allocate estimated payments each quarter is probably to closely track the performance of all of your Form 8960-relevant investment income, checking quarterly statements.  This would surely be time-consuming, and your time may well be more valuable than any penalty that might be assessed.

[glashfordjr]

JohnW222,

Thanks.  I had come to the same conclusion.  Fortunately Vanguard 1099 statements had most of the information I needed, i.e the dates of various distributions.  It was fairly time consuming but I was able to reduce the penalty about $50 down to zero.  I am retired and had the time to do it.  If I was still working, I am not sure it would been worth the effort.  Besides, sometimes I like solving a tricky problem.

Thanks for your comments.