Paul has the following information: $ 155,000 $ 27,600 $ 31,400 $ 31,447 AGI for 2020 Withholding for 2020 Total tax for 2019 Total tax for 2020 Required: a. How much must Paul pay in estimated taxes to avoid a penalty? (Round the final answer to nearest whole dollar amount.) Minimum estimated tax payment b. If Paul had paid $900 per quarter, would he have avoided the estimated tax penalty? O No O Yes
Paul has the following information: $ 155,000 $ 27,600 $ 31,400 $ 31,447 AGI for 2020 Withholding for 2020 Total tax for 2019 Total tax for 2020 Required: a. How much must Paul pay in estimated taxes to avoid a penalty? (Round the final answer to nearest whole dollar amount.) Minimum estimated tax payment b. If Paul had paid $900 per quarter, would he have avoided the estimated tax penalty? O No O Yes
Chapter26: Tax Practice And Ethics
Section: Chapter Questions
Problem 31P
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Transcribed Image Text:Paul has the following information:
AGI for 2020
Withholding for 2020
Total tax for 2019
Total tax for 2020
$ 155,000
$ 27,600
$ 31,400
$31,447
Required:
a. How much must Paul pay in estimated taxes to avoid a penalty? (Round the final answer to nearest whole dollar amount.)
Minimum estimated tax payment
b. If Paul had paid $900 per quarter, would he have avoided the estimated tax penalty?
ONo
O Yes
Expert Solution
PART A
A. How much must Paul pay in estimated taxes to avoid a penalty?
ESTIMATED TAXES TO AVOID A PENALTY WILL BE LESSER OF
1 . 90% OF CURRENT YEAR TAX WHICH IS ($31,447 X 90 %) = $28,302
2. 100 % OF PREVIOUS YEAR'S TAX = $31,400
WITHHOLDING FOR 2020 IS = $27,600
SO , PAUL MUST PAY AT LEAST ( $28,302 - $27,600 )
MINIMUM ESTIMATED TAX PAYMENT = $702
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ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT