Beth and Jay project the following taxes for the current year:Regular tax$50,000AMT10,000Self-employment tax12,000How much in estimated tax payments (including withholding from wages and quarterly estimated payments) should the taxpayers pay this year in order to avoid underpayment penalties under the following assumptions regarding the preceding tax year?a.Preceding tax year-AGI of $140,000 and total taxes of $30,000.b.Preceding tax year-AGI of $175,000 and total taxes of $48,000.
What will be an ideal response?
| Total expected liability | $50,000 + 10,000 + 12,000 | $72,000 |
| Safe harbor 1 | 90% × $72,000 | $64,800 |
| Safe harbor 2-100 or 110% of prior year | ? | ? |
| a. AGI < $150,000 | 100% of prior year tax | $30,000 |
| b. AGI > $150,000 | 110% of prior year tax | $52,800 |
| b. | The taxpayers should pay in at least $52,800 to avoid penalties. |
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