Your client wants to avoid any penalty for underpayment of estimated taxes by making timely deposits.Determine the amount of the minimum quarterly estimated tax payments required to avoid the penalty.Assume your client's adjusted gross income last year was $140,000.
A)$7,650
B)$7,750
C)$8,750
D)$11,000

Question

Your client wants to avoid any penalty for underpayment of estimated taxes by making timely deposits.Determine the amount of the minimum quarterly estimated tax payments required to avoid the penalty.Assume your client's adjusted gross income last year was $140,000. 
A)$7,650 
B)$7,750 
C)$8,750 
D)$11,000

Quizplus · Accepted Answer

A)Use the lesser of 90% of this year's tax or 100% of last year's tax.
 11ea7cb8_5520_efd4_928c_353a600902d0_TB1258_00 This amount is less than 25% of last year's tax liability ($40,000)minus the amount withheld ($9,000)or $7,750.

Your Client Wants to Avoid Any Penalty for Underpayment of Estimated