2. This year, Paula and Simon (married filing jointly) estimate that their tax liability will be $201,500. Last year, their total tax liability was $171,000. They estimate that their tax withholding from their employers will be $176,150.

a. Are Paula and Simon required to increase their withholdings or make estimated tax payments this year to avoid the underpayment penalty?

multiple choice

• Yes

• No

b. By how much, if any, must Paula and Simon increase their withholding and/or estimated tax payments for the year to avoid underpayment penalties?