A taxpayer with an AGI of $300,000 for 2015 pays estimated taxes. The taxpayer can avoid an underpayment penalty by paying:

Question

Quizplus · Accepted Answer

The taxpayer can avoid an underpayment penalty by paying at least 90% of his/her 2015 tax liability ratably over four quarterly payments. This is the safe harbor rule provided by the IRS for taxpayers who make estimated tax payments throughout the year. Option A is incorrect because it only applies to taxpayers with a lower AGI in the previous year. Option C is incorrect because it requires full payment of the tax liability, which may not be feasible for the taxpayer. Option D is incorrect because it requires an overpayment of taxes.

A Taxpayer with an AGI of $300,000 for 2015 Pays