Estimated Taxes Flashcards
1
Q
Underpayment of Estimated Tax
A
To avoid penalty for underpayment, total withholding and estimated tax payments generally must at least the lessor of (1) 90% of current year tax liability, or (2) 100% of the individual’s tax for the prior year, as long as there was a tax liability in prior year and prior year was a 12 month period. (3) AGI exceeding $150k must pay 110% instead of 100.
2
Q
Treatment of Amounts Withheld from wages during taxable year
A
(1) Wage withholding is deemed to be payment of estimated tax, and the (2) total amount withheld is applied equally to each installment unless the taxpayer establishes dates on which the amounts are withheld, in which case actual dates control the installment.
