Question

Mark and Sue are married and U.S. citizens with valid Social Security numbers. The Malones received wages and a large amount of taxable income not subject to withholding. Mark did not have health insurance coverage for 2019 and Sue had health insurance coverage through her employer. The Malones have a $2,500 balance due on their joint return and want advice on how to prevent a balance due next year. They do not anticipate a change in their sources of income and amounts received next year. 7. What actions should Mark and Sue take to prevent having a balance due next year? (Choose the best answer.)

A. They should use the IRS Tax Withholding Estimator and adjust their withholding.

B. They should refer to Publication 505, Withholding and Estimated Tax, and make estimated tax payments.

C. Both A and B.

D. None of the above.

Answer 1

Answer. (B) They should refer to Publication 505, Withholding and Estimated Tax, and make estimated tax payments.

Reason: Since the malones received large number of taxable income but such income is not subject to withholding, there would be no requirement to use the IRS Tax Withholding estimator. However to clear balance due on their joint return and to prevent a balance due next year, the malones should use Publication 505. Publication 505, Tax Witholding and Estimated Tax will be used to to inform taxpayers about their estimated taxes for current year and prior year as well as underpayment fine or penalty due for prior year.