Mr. Pearl's total income and self-employment tax on this year's Form 1040 is $72,610. If Mr. Pearl paid at least $65,349 of this tax in the form of withholding or quarterly estimated payments, he will not incur an underpayment penalty.

Question

Quizplus · Accepted Answer

If Mr. Pearl paid at least 90% of his total tax liability through withholding or estimated payments, he will avoid an underpayment penalty. In this case, $65,349 is more than 90% of $72,610, so he will not incur a penalty. Therefore, the statement is true.

Mr Pearl's Total Income and Self-Employment Tax on This Year's