Mickey,a calendar year taxpayer,was not required to file a 2009 Federal income tax return.During 2010,his AGI is $120,000 and his tax liability is $20,000.To avoid a penalty for tax underpayments for 2010,Mickey must make aggregate estimated tax payments of at least:

Question

Quizplus · Accepted Answer

Mickey's estimated tax payments are based on his previous year's tax liability, which in this case is $0 since he was not required to file a 2009 tax return. Therefore, to avoid a penalty for underpayment of taxes in 2010, he must make estimated tax payments equal to at least 90% of his current year's tax liability, which is $18,000. Option A and B are incorrect since Mickey is required to make estimated tax payments to avoid penalties for underpayments. Option D is incorrect since the question asks for the minimum amount of estimated tax payments required to avoid penalties, which is $18,000 in this case.

Mickey,a Calendar Year Taxpayer,was Not Required to File a 2009