In March 2014, Vincent anticipates that his actual tax liability for the tax year 2013 will be $12,000 and that federal income taxes withheld from his salary will be $9,000. Thus, when he files his income tax return in early 2014, he will have a $3,000 balance due. In the previous year, his actual federal income tax liability was $8,000 and his AGI was less than $150,000.
a. Is Vincent required to make estimated tax payments in 2013?
b. If no estimated tax payments are made, will Vincent be subject to an underpayment penalty if the actual tax liability for 2013 is $12,000? Why or why not?
c. Will Vincent be subject to an underpayment penalty if his actual tax liability for 2013 is instead $25,000? Why?