Question

Mary is a single wage earner with no dependents and taxable income of $205,000 in 2019. Her 2018 taxable income was $155,000 and tax liability was $31,490.

Calculate Mary's 2019 income tax liability and the minimum required 2019 annual payment necessary to avoid any penalty. Round your answers to two decimal places.

What is Mary's 2019 income tax liability: $
What is Mary's minimum required 2019 annual payment necessary to avoid any penalty: $

Answer 1

According to the tax rule 2019.

1)

Calculation of Tax liability:

Tax liability = (46628.50)+(205,000-304,100)*35%

= 46,943.50

2) Calculation of Annual payment necessary to avoid any penalty:

Mary's minimum required 2019 annual payment necessary to avoid any penalty = 34,639

Working Notes:

90% of their current tax liability (46,943.50*90%)	42,249.15
110% of last year tax liability (31,490*110%)	34,639.00

Note: Taxpayers can avoid an underpayment penalty if their withholding and estimated tax payaments equal or exceed one of the following two safe harbors.