Payments, Penalties, and Refunds

Question 1

General withholding rule?

Answer 1

90% of current year’s tax
100% of last year’s tax (AGI<150,000)
110% of last year’s tax (AGI>150,000)
[25% of these at each payment date]

Question 2

Estimated Tax due dates?

Answer 2

April 15, June 15, Sep 15, Jan 15

Question 3

Underpayment penalty of estimated tax exceptions

Answer 3

Liability < $1,000
Last year’s tax = 0
Reasonable cause

Question 4

T/F Taxpayer must have substantial authority for taking a position

Answer 4

T; rule of thumb is 40% chance of success

Question 5

T/F Accuracy related penalty is 30%

Answer 5

F; 20%

Question 6

Requrements to avoid accuracy penalty?

Answer 6

Substantial Authority
Adequate Disclosure
Reasonable Basis
(More Likely than Note standard for tax shelters)

Question 7

General Statute of Limitations?

Answer 7

Three years from filing date or
Two years from tax payment

Question 8

T/F SoL period can be extended by substantial understatements?

Answer 8

T; Extended to 6 years.