This year Lloyd, a single taxpayer, estimates that his tax liability will be $12,850. Last year, his total tax liability was $16,900.

He estimates that his tax withholding from his employer will be $9,605.

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