Mickey, a calendar year taxpayer, was not required to file a 2010 Federal income tax return. During 2011, his AGI is $120,000 and his tax liability is $20,000. To avoid a penalty for tax underpayments for 2011, Mickey must make aggregate estimated tax payments of at least:

Question

Quizplus · Accepted Answer

To avoid a penalty for underpayment of estimated tax, an individual must make estimated tax payments equal to at least 90% of their current year tax liability or 100% of their prior year tax liability (whichever is less). Since Mickey's prior year tax liability was $0 (because he did not file a tax return for 2010), he must make estimated tax payments of at least 90% of his current year tax liability, which is $18,000 (90% of $20,000). Therefore, the correct answer is C.

Mickey, a Calendar Year Taxpayer, Was Not Required to File