Answer:
Charles & Joan will be required to make estimated payments for 2016
Estimated payments to be made will be lower of the following
- Lesser of 90% of the tax shown on the return (see below) $15,694.00
- 100% of the prior year tax which is $ 16,604.00
Estimated payments for the year 2016 is shown below
Taxable income for 2016 ($79,500 × $31,500) = $ 111,000
Tax @ 15% upto $75,300 = $8,512.50
Tax @ 25% ($111,000 - $75,300) = $8,925.00
Estimated 2016 tax liability $17,437.50
90% of estimated tax liability $15,694.00
It can be seen from above, that they have to pay $ 15,694 as it is lesser than $16,604
Tax withholding already done in 2016 = $11,594.00
Balance tax to be paid - Difference between the liability and withholding = $4,100.00
The additional tax to be paid is $ 4,100
