Installment (1) Required cumulative payment (per quarter) under (2) Estimated tax payment under annualized (3) Required payment based on current year (4) Required cumulative payment (5) Actual payments Underpayment penalty prior year tax tax liability method method 1st quarter $ 125,000 $ 2nd quarter $ 250,000 $ 85,050 170,100 $ $ 99,157 $ 3rd quarter $ 375,000 $ 348,075 $ 4th quarter $ 500,000 $ 198,314 $ 297,470 $ 396,627 $ 85,050 170,100 $ 297,470 $ 396,627 $ $ 90,000 No 180,000 No 270,000 Yes 360,000 Yes
Estimated tax information:
XYZ made four equal estimated tax payments totaling $360,000 ($90,000 per quarter). For purposes of estimated tax liabilities, assume XYZ was in existence in 2023 and that in 2023 it reported a tax liability of $500,000. During 2024, XYZ determined its taxable income at the end of each of the first three quarters as follows:
| Quarter-end | Cumulative taxable income (loss) |
|---|---|
| First | $ 405,000 |
| Second | $ 1,105,000 |
| Third | $ 1,425,000 |
Finally, assume that XYZ is not a large corporation for purposes of estimated tax calculations.
Note: Do not round intermediate calculations. Round your answers to the nearest dollar amount.
e. Determine the quarters for which XYZ is subject to underpayment of estimated tax penalties.
Actual Taxable Income = $1,888,700
Actual IncomeTax Liability = $396,627
Actual Tax Rate = 21%
All I need is the Estimated Tax Payment Under Annualized Method for 4th Quarter
Step by step
Solved in 2 steps
