When filling out form 2210 (underpayment of estimated tax), the regular method (part IV), line 19 (estimated tax paid and withheld) how do you handle withholding?
The instructions say
For withheld federal income tax and excess social security or tier 1 railroad retirement tax (RRTA), you are considered to have paid one- fourth of these amounts on each payment due date unless you can show otherwise.
If you treat withholding as paid for estimated tax purposes when it was actually withheld, you must check box D in Part II and complete and attach Form 2210 to your return.
So it seems you can divide your withholding and excess social security by four and be done with it. In a way this does not make sense because the first quarter is 3 months, the second quarter is 2 months, the third quarter is 3 months, the fourth quarter is 4 months, but I guess that's what the law says.
But what about "unless you can show otherwise"? Your federal (and for that matter state) tax withheld may have dropped during the year because you had a paycut or lost your job, and/or you increased your
401K contributions (probably a good way to pick up stocks on the cheap). Is the some formula one could use, like divide withholding by x1 for quarter 1, by x2 for quarter 2, etc?
Second, if you count withholding as an estimated payment, meaning that your 4/15 paycheck counts towards your Q1 payment, then what about your 1/15 paycheck from the following year? Does it count towards your Q4 payment? If so, we have the possibility of double=dipping, because the 1/15 payment of next year also counts for Q1 of next year's form 2210.