Ms.Marston has net tax owing for 2009 of $4,500, net tax owing for 2010 of $8,000, and net tax owing for 2011 of $7,500.If she wishes to pay the minimum total amount of instal- ments for the 2011 taxation year, her first payment on March 15 will be for what amount?
A)Nil.
B)$1,125.
C)$1,875.
D)$2,000.

Question

Quizplus · Accepted Answer

To calculate the minimum total amount of instalments for the 2011 taxation year, Ms.Marston needs to take the net tax owed for the previous year and pay either 75% (if her net income for the previous year was less than $30,000) or 50% (if her net income for the previous year was more than $30,000) of that amount in installments throughout the year.

For 2009:
75% of $4,500 = $3,375 (less than $30,000)
For 2010:
50% of $8,000 = $4,000 (more than $30,000)
For 2011:
Ms.Marston needs to pay at least 50% of $7,500 = $3,750

To find out the amount of the first payment due on March 15, she needs to add up the required instalments for the year and divide by the number of payments due (4 in this case):

($3,375 + $4,000 + $3,750) / 4 = $2,781.25

However, the first payment is always slightly less than the others (since it is due mid-March instead of mid-April), so she should pay 25% of this amount:

$2,781.25 x 0.25 = $695.31 (rounded to the nearest dollar)

Therefore, the first payment due on March 15 should be for $1,875.

MsMarston Has Net Tax Owing for 2009 of $4,500, Net