Mickey,a calendar year taxpayer,was not required to file a Federal income tax return last year because his AGI was negative due to business losses.For this tax year,his AGI is $120,000 and his tax liability is $10,000.To avoid a penalty for tax underpayments for the current year,Mickey must make aggregate estimated tax payments of at least:

Question

Quizplus · Accepted Answer

According to the IRS regulations, if a taxpayer owes more than $1,000 in tax liability after subtracting withholding and refundable credits, they are required to pay estimated taxes. Since Mickey's tax liability is $10,000, he is required to pay estimated taxes unless he meets certain safe harbor provisions. One safe harbor provision is to pay at least 90% of the current year's tax liability, in which case there would be no underpayment penalty. 90% of $10,000 is $9,000, so Mickey must make estimated tax payments of at least $9,000 to avoid a penalty for underpayment of taxes.

Mickey,a Calendar Year Taxpayer,was Not Required to File a Federal