The annualized income installment relates to the method of calculating Estimated taxes for the next year and possible penalties. This is coming up in TurboTax and can be removed without problems or further errors.
TurboTax is a computer program that picks up on information from the interview sections and sometimes what is put there generates issues that cannot be removed in the interview session. It becomes "written in stone". In order to correct, we must delete as forms along with worksheets and related forms.
Form 2210 is IRS form that relates to Underpayment of Estimated taxes. You are not required to complete it since the IRS will figure the penalty, if any, and let you know if you owe anything additionally.
I've attached a link to the actual form so you can verify that the IRS does not require completion:
For TurboTax users whose income is uneven across the year, it would be very helpful if TurboTax would prepare form 2210 Schedule AI- Annualized Income Installment Method in which each quarter's income and deductions are calcuated and quarterly amount due is calculated. The program could ask - is your income even throughout the year, or did you have quarters with significantly higher incomes than other quarters? If uneven, you may benefit from filing form 2210. Would you like to calculate form 2210 by the installment method rather than by the annualized method? The lack of this option is a major flaw in TurboTax - especially at the Premier level. We paid appropriate estimated tax based on actual income during each quarter, but because we sold a house in June, we have a penalty. Having to hand calculate this form, and NOT e-file, to avoid a penalty is frustrating. Why doesn't TurboTax address this? Have any users found software that DOES calculate Form 2210 Schedule AI- Annualized Income Installment Method?
To reduce or possibly even eliminate your underpayment penalty, search for annualizing your tax (use this exact phrase) in the search box.
This will take you to the underpayment penalty section, and we'll take you through the steps to possibly reduce your underpayment penalty.
When calculating your Annualized Income, don't include the one-time Capital Gains from selling your home.
If you paid appropriate estimated payments, you should not have a Penalty (or possibly, just for the one quarter).
Generally, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and refundable credits, or if they paid withholding and estimated tax of at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller.
Click this link for more info on Underpayment Penalties.