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Paul has the following information: $ 155,000 $ 27,600 $ 31,400 $ 31,447 AGI for 2020 Withholding for 2020 Total tax for 2019 Total tax for 2020 Required: a. How much must Paul pay in estimated taxes to avoid a penalty? (Round the final answer to nearest whole dollar amount.) Minimum estimated tax payment b. If Paul had paid $900 per quarter, would he have avoided the estimated tax penalty? O No O Yes

Paul has the following information: $ 155,000 $ 27,600 $ 31,400 $ 31,447 AGI for 2020 Withholding for 2020 Total tax for 2019 Total tax for 2020 Required: a. How much must Paul pay in estimated taxes to avoid a penalty? (Round the final answer to nearest whole dollar amount.) Minimum estimated tax payment b. If Paul had paid $900 per quarter, would he have avoided the estimated tax penalty? O No O Yes

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Paul has the following information: AGI for 2020 Withholding for 2020 Total tax for 2019 Total tax for 2020 $ 155,000 $ 27,600 $ 31,400 $31,447 Required: a. How much must Paul pay in estimated taxes to avoid a penalty? (Round the final answer to nearest whole dollar amount.) Minimum estimated tax payment b. If Paul had paid $900 per quarter, would he have avoided the estimated tax penalty? ONo O Yes
Transcribed Image Text:Paul has the following information: AGI for 2020 Withholding for 2020 Total tax for 2019 Total tax for 2020 $ 155,000 $ 27,600 $ 31,400 $31,447 Required: a. How much must Paul pay in estimated taxes to avoid a penalty? (Round the final answer to nearest whole dollar amount.) Minimum estimated tax payment b. If Paul had paid $900 per quarter, would he have avoided the estimated tax penalty? ONo O Yes
Expert Solution
PART A

A. How much must Paul pay in estimated taxes to avoid a penalty?

 

ESTIMATED TAXES TO AVOID A PENALTY WILL BE LESSER OF

1 . 90% OF CURRENT YEAR TAX WHICH IS ($31,447 X 90 %) = $28,302

2. 100 % OF PREVIOUS YEAR'S TAX = $31,400

WITHHOLDING FOR 2020 IS = $27,600

SO , PAUL MUST PAY AT LEAST ( $28,302 - $27,600 )

MINIMUM ESTIMATED TAX PAYMENT = $702

 

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