2025 Form D-422A

Taxpayers whose income varies during the year can use D-422A to see whether the annualized income installment method reduces a required estimated payment. A seasonal business is one example. Use the worksheet with Form D-422 when determining interest on an underpayment of estimated income tax.

The 2025 worksheet uses four cumulative periods beginning January 1 and ending March 31, May 31, August 31, and December 31. These are not four separate calendar quarters. Complete Lines 1 through 25 of one column before moving to the next column.

If you use the annualized income installment method for one payment due date, you must use it for all payment due dates. The worksheet compares the annualized amount with the regular installment, adjusted for earlier reductions. Part-year residents and nonresidents should follow the special column instructions included on the form.

The form instructs part-year residents and nonresidents to complete only the columns for periods in which they had income from North Carolina sources. Before calculating tax on Line 16, multiply the applicable Line 15 amounts by the decimal on Form D-400, Line 13. Follow the worksheet instructions together with your Schedule PN residency calculation.

Transfer each Line 25 amount to the corresponding column of D-422, Line 16, and check the box on that line. Use D-422 to calculate any underpayment interest reported on D-400, Line 26e. The 2025 instructions also require E in the exception box beside Line 26e when you annualize income.

The 2025 PDF includes instructions above the worksheet. Keep the completed D-422A for your records rather than attaching it to your return. The North Carolina D-401 instruction booklet provides additional guidance on underpayment interest and the exception box. Use forms for the same tax year as your return.