This year Lloyd, a single taxpayer, estimates that his tax liability will be $10,900. Last year, his total tax liability was $15,600. He estimates that his tax withholding from his employer will be $8,370.

Question

Peyton Reilly

Business

19 March, 14:01

This year Lloyd, a single taxpayer, estimates that his tax liability will be $10,900. Last year, his total tax liability was $15,600. He estimates that his tax withholding from his employer will be $8,370.

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Answers (1)

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Sofia Davis · Answer 1

How much does Lloyd need to increase his withholding by (for the year), in order to avoid the underpayment penalty?

Explanation:

If he increase withholding by $1,440 for the year.

A citizen can maintain a strategic distance from an underpayment of punishment if their retention and evaluated assessment installment measure up to or surpass one of the two safe harbors.

90% of current expense risk = 90% * $10,900

= $9,810.

100% of past assessment risk = $15,600.

Since, Lloyd's retention does not equivalent or surpass $9,810 or $15,600.

He should expand retaining or make payment this year to stay away from the underpayment punishment

= $9,810 - $8,370

= $1,440