Kate, an unmarried taxpayer with incomeexclusively from wages, filed her initial income taxreturn for Year 8. By December 31, Year 8, Kate'semployer had withheld $16,000 in federal incometaxes and Kate had made no estimated taxpayments. On April 15, Year 9, Kate timely filed anextension request to file her individual tax returnand paid $300 of additional taxes. Kate's Year 8income tax liability was $16,500 when she timelyfiled her return on April 30, Year 9, and paid theremaining income tax liability balance.What amount would be subject to the penalty forthe underpayment of estimated taxes?

Tax liability is determined based on applicable tax rates and taxable income. There are different…

Answered: What amount would be subject to the…

Business

Accounting

What amount would be subject to the penalty for the underpayment of estimated taxes?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: why are the operating taxes in the FCF analysis calculating without taking into account the tax…

A: Interest paid on loans or debts is an expense for the company. Also these interests reduces the…

Q: Explain how a change in tax rates affects the measurement of deferred tax amounts.

A: Deferred Tax Asset Items on a company's balance sheet that may be used to reduce taxable income in…

Q: When does tax allocation within a period become necessary?How should this allocation be handled?

Q: what are the advantages and disadvantages of the payroll tax deferral?

A: Highlights of the payroll tax deferral scheme:- It applies to all those employees whose before tax…

Q: Deferred taxes result from different methods applied for taxable income and income for financial…

A: Deferred taxes represent temporary differences in income recognition for tax and financial…

Q: Are there differences between financial reporting standards and income tax rules thatwill not cause…

A: Normally, business follow GAAP in preparing their financial statements in order to arrive at their…

Q: who are benefits or do not benefit from payroll tax deferral?

Q: Why do deferred taxes arise

A: The deferred taxes usually arise when there is balance of over or advance payment of taxes to an…

Q: What AMT adjustment items are likely to affect all taxpayers who itemize their deductions? Please…

A: AMT(ALTERNATE MINIMUM TAX) The purpose of AMT is to ensure everyone pays a minimum amount of tax. It…

Q: Where can authoritative IFRS related to the accounting for taxes be found?

A: Accounting changes include the change in methods or ways of accounting by the company, which will…

Q: deferred tax assets and deferred tax liabilities

A: The deferred tax assets and deferred tax liabilities arise due to the tax effect of timing…

Q: The amount of taxes generated is incorrect...

A: Section 1245 assets comprise personal property used in trade or business and held for over 12…

Q: What is an unrecognized tax benefit and how does it affect a company's current income tax expense?

A: The Meaning of Income Tax: FASB defines income tax as a tax on earnings. It is measured in terms of…

Q: What is the taxable base for federal income taxes? a. Gross income b. Net worth c. Total assets d.…

A: Taxable base is the amount on which income taxes are calculated by applying the applicable rate.

Q: How are deferred tax assets and deferred tax liabilitiesreported on the balance sheet?

Q: What is the name of the amount of money that can bededucted directly from the computed tax, instead…

A: Tax or Taxes: Tax is an amount paid by the persons (individuals and business entities) to a…

Q: Tax rates other than the current tax rate may be used to calculate the deferred income tax amount on…

A: Taxation is the process by which governments collect money from individuals and businesses to fund…

Q: In computing the deferred tax asset or liability, w. tax rate is used? a. Current tax rate b.…

A: Deferred tax asset or liability arises due to temporary differences

Q: What is a deferred tax asset and how is the value created?

A: Deferred tax asset: When Income Tax Expense account is more than the Income Tax Payable account,…

Q: While earnings on assets held in a Tax Free Savings Account (TFSA) will not be taxed while the…

A: False

Q: What are FUTA and SUTA taxes? Is there any possible reduction in the FUTA tax rate? If so, what is…

A: Introduction: Employer payroll taxes are paid by the employer from its own funds on the basis of…

Q: Why are payroll taxes and sales taxes consideredliabilities?

Q: Describe the presentation of deferred income taxes in financial statements.

A: Deferred tax asset: The deferred tax asset is the excess, overpaid, or paid in advance expenses.…

Q: What are the advantages of claiming the standard deduction versus itemizing deductions on your…

A: Income tax: It is the tax every individual or company is liable to pay on the income generated…

Q: What is a temporary difference related to deferred taxes?

A: Deferred Taxes: The timing difference of tax effect called Deferred tax. Its recognized on all…

Q: Blank income is subject to federal taxes?

A: What is Federal Taxes? Federal revenue enhancement is that the tax levied by the inner Revenue…

Q: What valuation allowance is used with respect to a deferred tax asset?

A: Deferred tax asset: A deferred tax asset refers to an asset that is recognized due to a temporary…

Q: What is the difference between a progressive tax, a proportional tax, and a regressive tax?

A: Tax is an important concept in the area of finance. The United states has three types of taxes…

Q: Which of the following is NOT a reason why timing is significant in tax? Group of answer choices…

A: Tax: When any assesse is earned the income from any sources of income which are mentioned in the tax…

Q: Malcolm Figueroa is a sales employee of Carefree Pools and Spas, Incorporated, During 2020, he was…

A: Given : Fair market value = 35,000 Drove total = 22,000 miles Used car = 26,000 miles Per mile = 5.5…

Q: Which tax does not have a wage base limit? A. FICA−Medicare B. Federal unemployment tax C.…

Q: It can be said that the actual cost of an expenditure that is deductible for tax purposes is less…

A: Tax payable is the amount that is to be paid by the tax payer to the tax receivable individual or…

Q: Horace is an employee of Ace Electric Company. Ace provides all employees with group term life…

A: Many employers provide fringe benefits to their employees. One such benefit that is commonly…

Q: ects on income taxes, as measured

A: Deferred tax refers to the tax outcome because of the timing difference which factually refers to…

Concept explainers

Deferred Tax

Deferred tax is an estimated future tax which is made while preparing accounts. It is estimated as a result of past and present transactions in the financial statements. It is not the actual tax which needs to be paid or refundable from the revenue authority, it is an accounting entry. It exists because of the difference between accounting profits and taxable profits.

Question

Kate, an unmarried taxpayer with income
exclusively from wages, filed her initial income tax
return for Year 8. By December 31, Year 8, Kate's
employer had withheld $16,000 in federal income
taxes and Kate had made no estimated tax
payments. On April 15, Year 9, Kate timely filed an
extension request to file her individual tax return
and paid $300 of additional taxes. Kate's Year 8
income tax liability was $16,500 when she timely
filed her return on April 30, Year 9, and paid the
remaining income tax liability balance.
What amount would be subject to the penalty for
the underpayment of estimated taxes?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Definition of tax liability:

VIEW

Step 2: Determining the penalty amount for underpayment of estimated taxes:

VIEW

Solution

VIEW

Step by step

Solved in 3 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

How did you compute the tax shield? because when I multiply the total dedcution with the rate, it gives me a different answer.
What are the two basic requirements applied to the measurement of current and deferred income taxes at the date of the financial statements?
What is the equation for M & M Proposition II, without taxes, is best shown as?
Explain the differences between sales taxes and excise taxes. Give an argument in favor of excise taxes. Give an argument against excise taxes.
The tax rate that is applied against a prepayment penalty is the ______. Group of answer choices a. Ordinary income tax rate b. Depreciation recapture tax rate c. Local property tax rate d. Capital gains tax rate
s this statement true about underpayment penalties? The taxpayer will never received an underpayment penalty so long as their taxes are paid before the original due date
what is the interest rate before tax based on the above calculations?
What formula is used to “gross-up” supplementalpayments in order to cover the taxes on the supplementalpayments?
How might a reduction in future tax rates affect deferred tax assets in a way that reduces current net income?
Which is not a source of federal revenue? Employment taxes Estate and gift taxes Taxes on individuals Sales taxes
May the taxpayer's liability to pay tax be a subject of set-off? Why?
How will a capital gain distribution from a REIT be reported on the income tax return if Schedule D is not required to be filed?