Harmon, Inc. was incorporated and began business on January 1, 2011. Its tax liability for 2011 was $36,000. Its tax liability for 2012 was $50,000. Which of the following is a correct statement concerning the payment of estimated taxes for 2012?

Question

Quizplus · Accepted Answer

Since the tax liability for 2012 is higher than the previous year, Harmon must pay estimated taxes for 2012. According to IRS rules, corporations must pay estimated taxes in four equal installments due on April 15, June 15, September 15, and December 15. To avoid a penalty for underpayment of estimated taxes, Harmon must pay at least 90% of its current year tax liability or 100% of its prior year tax liability, whichever is smaller. 
Therefore, Harmon must pay $9,000 (90% of $50,000) on the 15th of April, June, September, and December. The remaining $14,000 can be paid by the tax deadline of March 15, 2013.