Question

ane is a single taxpayer with a current year AGI of $181,000 and current year income tax liability of $39,610. Her AGI in the prior year was $150,400 and prior year tax liability was $32,182. Jane earns her income ratably during the year. In order to avoid penalty, the smallest amount of required annual withholding and estimated payments is:

a. $35,649

b. $32,182

c. $39,610

d. $35,400

e. $43,571

Answer 1

for taxpayers whose AGI in the previous year was more than $150,000 , the the smallest amount of required annual withholding and estimated payments to avoid penalty shall be lower of the following two amounts -

1) 90% of the current year liability i.e. $39,610 * 90% = $35,649

2) 110% of previous year tax liability i.e. $32,182 * 110% = $35,400

the lower of these amounts is $35,400

hence, the correct answer is d. $35,400