Your client wants to avoid any penalty for underpayment of estimated taxes by making timely deposits.Determine the amount of the minimum quarterly estimated tax payments required to avoid the penalty.Assume your client's adjusted gross income last year was $140,000. $$\begin{array} { | l | r | }
\hline \text { Last year's tax liability } & \$ 40,000 \
\hline \text { This year's estimated total tax } & 44,000 \
\hline \text { Taxes to be withheld for this year } & 9,000 \
\hline
\end{array}$$
A)$7,650
B)$7,750
C)$8,750
D)$11,000

Question

Your client wants to avoid any penalty for underpayment of estimated taxes by making timely deposits.Determine the amount of the minimum quarterly estimated tax payments required to avoid the penalty.Assume your client's adjusted gross income last year was $140,000. $$\begin{array} { | l | r | } 
\hline \text { Last year's tax liability } & \$ 40,000 \
\hline \text { This year's estimated total tax } & 44,000 \
\hline \text { Taxes to be withheld for this year } & 9,000 \
\hline
\end{array}$$
A)$7,650
B)$7,750
C)$8,750
D)$11,000

Quizplus · Accepted Answer

The minimum quarterly estimated tax payment is 25% of the total estimated tax liability for the year, minus any taxes that will be withheld during the year. In this case, the total estimated tax liability is $44,000, and the taxes to be withheld are $9,000. Therefore, the minimum quarterly estimated tax payment is $7,750.

Your Client Wants to Avoid Any Penalty for Underpayment of Estimated