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This year Lloyd, a single taxpayer, estimates that his tax liability will be $11,200. Last year, his total tax liability was $15,800. He estimates that his tax withholding from his employer will be $8,560.

b. Assuming Lloyd does not make any additional payments, what is the amount of his underpayment penalty? Assume the federal short-term rate is 5 percent.

Dates Actual Withholding Required Withholding Over (Under) Withheld Penalty Per Quarter April 15th June 15th September 15th January 15th Total $ 0.00