A taxpayer had AGI of $300,000 in 2017 and AGI of $250,000 in 2016.When filing her 2017 return,she expects her unpaid tax liability to be at least $1,000.She must make estimated payments equal to the smaller of 90% of the tax shown on her 2017 return or

A) 110% of the tax on her 2016 return because 2016 AGI was more than $150,000.
B) 100% of the tax on her 2016 return regardless of 2017 AGI.
C) 100% of the tax on the 2016 return because 2017 AGI was more than $100,000.
D) 110% of the tax on the 2016 return because 2016 AGI was greater than 2017 AGI.

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Zybrea Knight · Accepted Answer

Final Answer : A, Explanation :  A) The correct answer is that she must make estimated payments equal to the smaller of 90% of the tax shown on her 2017 return or 110% of the tax on her 2016 return because her 2016 AGI was more than $150,000. This rule applies to taxpayers whose AGI exceeds $150,000 in the preceding year, requiring them to pay 110% of the previous year's tax to avoid underpayment penalties.

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