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An annualized plan is a one-year, four-period plan that calculates federal quarterly estimated payments. Annualized plans allow you to provide different quarterly payment amounts for clients whose income is earned unevenly throughout the year (for example, a client with income from a seasonal business or with large capital gain transactions at the end of the year).

Creating annualized plans

To create an annualized plan, mark the Annualized Plan radio option in the New Plan dialog when adding a new plan. The entry in the Number of Cases field changes to 4, and the Number of years field changes to 1.

Note: Annualized plans are only federal plans; states cannot be added. You cannot add a state module to an annualized plan because annualized plans only calculate Federal quarterly estimated tax payments.

Working with annualized plans

Annualized plans cover one year and four periods: 1/1-3/31, 1/1-5/31, 1/1-8/31, and 1/1-12/31.

If the AutoSpread feature is turned on, any data that you enter spreads appropriately to the columns to the right. The AutoSpread feature spreads income and deduction amounts in such a way that assumes that the income or deductions are earned or paid evenly throughout the year. Amounts that should not vary with each column, such as the Taxpayer dependents field in the Main > Exemptions tab, will copy to each column without changing their value.

AutoSpread will not overwrite amounts you have previously entered in columns to the right.

Note: You can override any amounts inserted by the AutoSpread feature, and you can turn off the AutoSpread calculation by clicking the Auto-spread Annualized  button on the toolbar.

Calculations in annualized plans

Onvio Advisory calculates minimum required quarterly estimated tax payments in the Payments > Annualized tab. This tab replicates the Annualized Estimated Tax Worksheet found in IRS Publication 505. Onvio Advisory displays the taxpayer's required quarterly estimated payments at the bottom of this screen. Enter the taxpayer's actual quarterly payments made (which may or may not equal the required payment) on the Payment > Federal Pmts tab.

When using an annualized plan, if the taxpayer's payments are less than the calculated minimum required, Onvio Advisory calculates the underpayment penalty in the Payments > Underpayment tab using the Form 2210 Annualized Income Installment Method worksheet.