Form 2210, 2210AI, and Estimated Tax Payments

[kiva]

Here's my situation, roughly:

• 2022 tax liability: ~$80k
• 2023 tax liability: ~$130k
• No 2023 withholdings or estimated taxes paid to-date
• ~$3k of tax liability was incurred in Q3; the remainder was incurred in Q4 ($0 in Q1 and Q2)
• So I am using 2210AI to calculate the penalty owed

However, it's not clear to me how much I need to submit for a 2023 estimated tax payment by 1/15/2024 in order to minimize the estimated tax underpayment penalty. 

After I indicated in the step-by-step that I would pay the balance due on 1/15/2024, Turbo Tax is entering the full $130k amount in Form 2210 Row 11: Estimated Tax Paid, column (d) 1/15/2024 and I don't seem to be able to adjust that value.  (If I override the value on Row 11, nothing else changes, and when I trace it back to the Tax Payments Worksheet, there are no values are entered in the Estimated Tax Payments for 2023 section and my changing the value for the Federal 1/15/2024 entry has no effect on Form 2210 Row 11 or otherwise, other than reducing the overall "Federal Tax Due" value).  Form 2210 Row 10 is showing lower amounts, with Q3 + Q4 entries equal to ~$88k, which I believe to be the safe harbor value of 110% of prior years' tax liability.

So, my questions are:

1. Which amount do I need to pay to minimize underpayment penalties?  The $88k or the $130k?  I would think it's the $88k, but am confused by the $130k.
2. Once I do settle on an estimated tax amount to pay by 1/15/2024, I then need to manually add it as an Estimated Tax Payment in Turbo Tax? 

[Anonymous_]

You do need to enter the figure for your estimated tax payment manually into the program, but you might want to try doing so before you work with 2210 and 2210AI.

[kiva]

Hmm.  I entered a value of $88k for the 1/15/24 estimated tax payment and re-did the 2210 and 2210AI forms, but the values on Form 2210 Rows 10 and 11 did not change. 

I'm still not certain which one I should be planning to pay - the "Required Installment" of Row 10 or the "Estimated Tax Paid" of Row 11.

Although now I'm re-reading that "if line 11 is equal to or more than line 10 for all payment periods, stop here; you don't owe a penalty".  So that increases my belief that I would only need to pay the $88k on 1/15/24 since that would exceed the amount on Row 10 (d), and I would only owe a small penalty for the underpayment of column (c) since no estimated tax was paid on 9/15/23.  

But is there a way I can change the value of Row 11 (d) in Turbo Tax to test this out and see if the penalty amount changes?  Over-writing doesn't change any other values and changing the value in the Tax Payments Worksheet doesn't seem to effect Row 11 (d) either.  So I'm not sure where it's pulling the value from.

[Anonymous_]

I would recommend not overriding anything in Forms Mode but I agree that you can probably avoid any penalty with the $88k estimated tax payment.

I also do not know where that value is being pulled from. You could contact Support but it's doubtful they would know either.

How do I contact TurboTax? (intuit.com)

[kiva · Accepted solution]

@Anonymous_ Thanks for your help. I think I figured it out/confirmed what needs to be paid.  I put the $88k in the Tax Payments worksheet then re-did the step-by-step process but at the end removed the "Date You'll Pay the Balance Due" (previously 1/15/24).  After doing that and checking the forms, Row 11 (d) changed to the $88k and the same minimal underpayment penalty was due as before (i.e., only on the Row 10 & 11 (c) underpayment).  The wording of that screen is tricky at best -- it says that entering the date or not will determine the underpayment penalty amount.  But obviously there is more to it than just that, and the value it enters if you put in the date is the full tax amount due.

(and for the love of Mike, I wish Turbo Tax wouldn't auto-check the box that says "do not use the annualized income installment method" immediately after guiding you through the process to enter all the AI data.  In multiple iterations of trying to figure this out, when clicking through the interview and leaving all the values the same I've accidently left that checked more than once, requiring me to have to go back through and re-add all the AI data again.. argh.  and really, why would you even ask that at that point?)

Thanks again - much appreciated.

[kiva]

I can also confirm that at this point (i.e., after I told TT I wasn't going to pay the balance due), when I change the value of the Estimated Tax Payment for 1/15/24 in the Tax Payments worksheet the value in 2210 Row 11 (d) changes as well.

[KCL479]

I agree 100% that TTax should NOT auto-check the box that says "Do not use the annualized income installment method" immediately after guiding the user through the process of entering all the data for the method. Took me a few iterations to figure out why TTax kept saying I owe tax penalty even though I paid the estimated taxes on time, and I THOUGHT I put in all the correct data by quarter on Form 2210/AI input screens. That check box the end should have been unchecked by default unless the user decided NOT to use the method after seeing the end results. It was quite confusing and frustrating.