This year Lloyd, a single taxpayer, estimates that his tax liability will be $10,000. Last year, his total tax liability was $15,000.He estimates that his tax withholding from his employer will be $7,800. A. How much does Lloyd need to increase his withholding by (for the year), in order to avoid the underpayment penalty? B. Assuming Lloyd does not make any additional payments, what is the amount of his underpayment penalty? Assume the federal short-term rate is 5 percent Dates 15- Apr 15- Jun 15- Sep 15- Jan TTL Actual witholding Req witholding Over (under) witheld Penalty per qtr
This year Lloyd, a single taxpayer, estimates that his tax liability will be $10,000. Last year, his total tax liability was $15,000.He estimates that his tax withholding from his employer will be $7,800. A. How much does Lloyd need to increase his withholding by (for the year), in order to avoid the underpayment penalty? B. Assuming Lloyd does not make any additional payments, what is the amount of his underpayment penalty? Assume the federal short-term rate is 5 percent Dates 15- Apr 15- Jun 15- Sep 15- Jan TTL Actual witholding Req witholding Over (under) witheld Penalty per qtr
Chapter17: Tax Practice And Ethics
Section: Chapter Questions
Problem 26P
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Transcribed Image Text:This year Lloyd, a single taxpayer, estimates that his tax liability will be $10,000. Last year, his total tax
liability was $15,000.He estimates that his tax withholding from his employer will be $7,800.
A. How much does Lloyd need to increase his withholding by (for the year), in order to avoid the
underpayment penalty?
B. Assuming Lloyd does not make any additional payments, what is the amount of his underpayment
penalty? Assume the federal short-term rate is 5 percent
Dates
15-
Apr
15-
Jun
15-
Sep
15-
Jan
TTL
Actual
witholding
Req
witholding
Over
(under)
witheld
Penalty
per qtr
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