Jeff's Tax Liability for Last Year Was $30,000

question 96

Essay

Jeff's tax liability for last year was $30,000. Jeff projects that his tax for this year will be only $25,000. Jeff is self-employed and, thus, will have no withholding. His AGI for last year did not exceed $150,000. How much estimated tax, at a minimum, should Jeff pay for this year to avoid the penalty for underpayment of estimated taxes? How would your answer change if his income exceeded last year's due to a large capital gain at the end of the year?

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Definitions:

Ideal Time

The most favorable or optimum period within which a certain action or condition is best to occur or be achieved.

Ostomy Bag

A medical device attached to the body to collect waste from a surgically created opening in the abdomen, used after certain types of surgery like a colostomy or ileostomy.

Fleet Enema

A brand of enema that is used to stimulate bowel movements and relieve constipation by introducing a solution into the rectum.

Irrigation Solution

A fluid used to clean, flush, or moisten tissues, usually in medical procedures or wound care.