Question

Which of the following is NOT an exception to the penalty for failure to pay esstimated tax? A. The total balance due after withholding is less than $1,000, B. The total balance due after withholding is less than $5,000, C. the taxpayer paid (through withholding and/or timely estimated tax payments) as least 90% of the current year's tax liability, D. The taxpayer paid (through withholding and/or timely estimated tax payments) at least 100% of the previous year's tax liability, or $110% of the taxpayer's adjusted gross income for the previous year was $150,000 or more

Answer 1

The provisions to avoid penalty for failure to pay estimated tax are : If taxpayers either owe less than $1,000 in tax after subtracting their withholding and refundable credits, or if they paid withholding and estimated tax of at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller.

Thus, the following is NOT an exception to the penalty for failure to pay esstimated tax:

B. The total balance due after withholding is less than $5,000.