A question about tax?

Question

Billy has the following information:

AGI for 2006 $125,000
withholding for 2006 $20,000
Total tax for 2005 $29,000
Total tax for 2006 $31,250


a. How much must Billy pay in estimated taxes to avoid a penalty?
b. If Billy paid $1,000 per quarter, would he have avoided the estimated tax penalty?

Answer 1

Depending on if Billy is subject to the rule of having to pay 110% of prior year tax if you are a high income person, he would have to pay 29,000 in taxes or 31,900 (110% of 29,000) for 2006 to avoid underpayment penalty. So to answer your questions

a. Billy would have to pay either 9,000 or 11,250 (11,900 would be 110% of prior year, but since 2006 is 31,250 and he's already had 20,000 withheld, the difference would be 11,250) in estimated taxes to avoid a penalty.

b. 1,000 per quarter would not be enough to avoid the estimated tax penalty.

Answer 2

a. Billy must pay $9000 in estimated taxes so that total of withholdings and estimated tax payments is $29,000 -- 100% of the taxes for the previous year.

b. No Billy will not avoid estimated tax penalty by making quarterly payments of $1,000. He must pay $2,250 per quarter.

ADD: If Billy's AGI is more than $150,000, only then he must pay 110% of the taxes for the previous year.

Answer 3

Given that you don't say what Billy's filing status is, single, married, head of household, or how many dependents he has if any, or what deductions or credits he might have, there is absolutely no way to give an answer to your question. If you are going to type in a homework problem here, it would at least be helpful if you typed in the whole problem.

Answer 4

Not enough information to answer the question. Need to know marital and filing status, any itemized deductions, etc.