With Respect to Estimated Tax Payments for a Taxpayer with AGI

question 41

Multiple Choice

With respect to estimated tax payments for a taxpayer with AGI of $150,000 or lower in the prior year,all of the following are generally true with the exception of

• A)no penalty is imposed if the estimated tax is less than $1,000.
• B)no penalty is imposed if the individual has no tax liability for the prior year.
• C)no underpayment penalty is imposed if the estimated payments total at least 90% of the tax due for the current year.
• D)no underpayment penalty is imposed if the estimated payments total at least 90% of the actual tax liability for the prior year.

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Definitions:

Interest

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, paid by borrowers to lenders.

Savings Account

A deposit account held at a bank or other financial institution providing principal security and a modest interest rate.

Opportunity Cost

The deficit of potential benefits that could be reaped from alternative options when one is picked.

Dollar Value

The worth of an item, service, or amount of money expressed in terms of the United States dollar currency.