Question

In: Accounting

Charles and Joan Thompson file a joint return. In 2018, they had taxable income of $94,480...

Charles and Joan Thompson file a joint return. In 2018, they had taxable income of $94,480 and paid tax of $12,665. Charles is an advertising executive, and Joan is a college professor. During the fall 2019 semester, Joan is planning to take a leave of absence without pay. The Thompsons expect their taxable income to drop to $76,000 in 2019. They expect their 2019 tax liability will be $8,735, which will be the approximate amount of their withholding. Joan anticipates that she will work on academic research during the fall semester. During September, Joan decides to perform consulting services for some local businesses. Charles and Joan had not anticipated this development. Joan is paid a total of $38,000 during October, November, and December for her work. Use the appropriate Tax Rate Schedules.

Required: a. What estimated tax payments are Charles and Joan required to make, if any, for tax year 2019?

Solutions

Expert Solution

Charles & Joan will be required to make estimated payments for 2019

Estimated payments to be made will be lower of the following

  1. Lesser of 90% of the tax shown on the return (see below) $
  2. 100% of the prior year tax which is $ 12,665

Estimated payments for the year 2016 is shown below

Taxable income for 2016 ($76,000 + $38,000) = $ 114,000

Tax @ 15% upto $75,300 = $8512.50

Tax @ 25% ($114,000 - $75,300) = $9675

Estimated 2016 tax liability $18,187.50

90% of estimated tax liability $16,369(approx.)

It can be seen from above, that they do not have to pay $16,369 as it is more than $ 12,665

Tax withholding already done in 2019 = $8735

Balance tax to be paid = Difference between the liability and withholding = $7634

The additional tax to be paid is $ 7634


Related Solutions

Charles and Joan Thompson file a joint return. In 2017 they had taxable income of $92,370...
Charles and Joan Thompson file a joint return. In 2017 they had taxable income of $92,370 and paid tax of $14,571. Charles is an advertising executive, and Joan is a college professor. During the fall 2018 semester, Joan is planning to take a leave of absence without pay. The Thompsons expect their taxable income to drop to $70,000 in 2018. They expect their 2018 tax liability will be $8,022, which will be the approximate amount of their withholding. Joan anticipates...
Charles and Joan Thompson file a joint return. In 2017, they had taxable income of $92,370...
Charles and Joan Thompson file a joint return. In 2017, they had taxable income of $92,370 and paid tax of $14,571. Charles is an advertising executive, and Joan is a college professor. During the fall 2018 semester, Joan is planning to take a leave of absence without pay. The Thompsons expect their taxable income to drop to $70,000 in 2018. They expect their 2018 tax liability will be $8,022, which will be the approximate amount of their withholding. Joan anticipates...
The Johnsons file a married, joint return. They had taxable income of $170,000 in 2020. Their...
The Johnsons file a married, joint return. They had taxable income of $170,000 in 2020. Their city tax rate is 3.876% and state tax rate is 6.21%. What was their total effective (marginal) tax rate? Assume they had $10,000 in short-term capital gains and $12,000 in long-term taxable gains. How much are their total taxes?
James and Mary are married and file a joint tax return. Together, their taxable income is...
James and Mary are married and file a joint tax return. Together, their taxable income is $80,000. How much will they pay in taxes? (Round answers to 0 decimal place, e.g. 5275.)
Mr. and Mrs. HenryHenry file a joint return and have taxable income of $ 380,000 without...
Mr. and Mrs. HenryHenry file a joint return and have taxable income of $ 380,000 without considering the following independent fact situations. a. They have a STCG of $ 31,000 and a LTCL of $ 20,000 b. They have a LTCG of $24,000 due to the sale of a collectible and a LTCG of $12,500 due to the sale of General Motors stock. c. Same as Part b except they also have a STCL of $4,500. Requirement Determine the increase...
Mr. and Mrs. Sedlock file a joint return and have a taxable income of $370,000 without...
Mr. and Mrs. Sedlock file a joint return and have a taxable income of $370,000 without considering the following information below. Determine the increase in their tax liability for the following independent fact situations. a. They have a STCG of $20,000 and a LTCL of $12,000. b. They have a LTCG of $30,000 due to the sale of a collectible and a LTCG of $9,000 due to the sale of General Motors stock. c. Same as part b except they...
Jack and Jane are married and file a joint return for 2020. Theyhave wage income...
Jack and Jane are married and file a joint return for 2020. They have wage income of $150,000; net long-term capital gains of $20,000; net short-term capital gains of $5,000; corporate bond interest of $3,000; share of S corporation income of $8,000; cash distributions from the S corporation of $3,000; ordinary cash dividends of $6,000; qualifying cash dividends of $5,000; inheritance received from deceased aunt’s estate of $18,000; deductions for AGI (Adjusted Gross Income) of $11,000; itemized deductions of $26,000;...
Ava and her husband, Leo, file a joint return and are in the 24% Federal income...
Ava and her husband, Leo, file a joint return and are in the 24% Federal income tax bracket. Ava’s salary is $75,000. Her employer offers a child and dependent care reimbursement plan that allows up to $5,000 of qualifying expenses to be reimbursed in exchange for a $5,000 reduction in the employee’s salary. Because Ava and Leo have two minor children requiring child care that costs $5,800 each year, Ava is wondering if she should sign up for the program...
Ava and her husband, Leo, file a joint return and are in the 24% Federal income...
Ava and her husband, Leo, file a joint return and are in the 24% Federal income tax bracket. Ava's salary is $75,000. Her employer offers a child and dependent care reimbursement plan that allows up to $5,000 of qualifying expenses to be reimbursed in exchange for a $5,000 reduction in the employee's salary. Because Ava and Leo have two minor children requiring child care that costs $5,800 each year, Ava is wondering if she should sign up for the program...
1. George & Martha are married and file a joint income tax return. In 2017 the...
1. George & Martha are married and file a joint income tax return. In 2017 the couple had $ 250,000 of total income and $ 200,000 in taxable income. a. Calculate George & Martha’s Washington’s 2017 federal income tax liability (USE THE 2017 tax rate schedule in appendix D in your book). b. What is George & Martha’s marginal federal tax rate for 2017? c. What is the George & Martha’s average tax rate for 2017? d. What is the...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT