Julie, a self-employed individual, is required to make estimated payments of her tax liability for the year.
Question:
Julie, a self-employed individual, is required to make estimated payments of her tax liability for the year. Her tax liability for 2020 was $25,000, and her AGI was less than $150,000. For 2021, Julie ultimately determines that her income tax liability is $18,000. During the year, however, she made the following payments, totaling $13,000.
Because Julie prepaid so little of her ultimate income tax liability, she now realizes that she may be subject to the penalty for underpayment of estimated tax.
a. Determine Julie’s penalty for underpayment of estimated tax, if any.
b. Instead, assume that Julie’s tax liability for 2020 was $15,960.
Step by Step Answer:
South-Western Federal Taxation 2022 Individual Income Taxes
ISBN: 9780357519073
45th Edition
Authors: James C. Young, Annette Nellen, William A. Raabe, Mark Persellin, William H. Hoffman