AFTR Tax Withholding and Estimated Taxes Flashcards

An employee who wants to claim exempt from federal income tax withholding must meet which requirement?

Answer: Had no federal income tax liability last year and expects none this year

To claim exempt from withholding on Form W-4, the employee must have had zero federal income tax liability the prior year and expect zero liability in the current year.

Which form does an employee complete to tell their employer how much federal income tax to withhold?

Answer: Form W-4

Form W-4, Employee's Withholding Certificate, is submitted to the employer to designate withholding allowances and any additional withholding amounts.

When are estimated tax payments generally due for calendar-year individuals?

Answer: April 15, June 15, September 15, January 15

The four estimated tax due dates for calendar-year taxpayers are April 15, June 15, September 15, and January 15 of the following year.

Which form is used by individuals to pay estimated federal income taxes?

Answer: Form 1040-ES

Form 1040-ES, Estimated Tax for Individuals, is used to calculate and pay quarterly estimated taxes.

A taxpayer avoids the underpayment penalty if withholding and estimated payments equal at least what percentage of the prior year's tax liability (for taxpayers with AGI ≤ $150,000)?

Answer: 100%

One safe harbor is paying 100% of the prior year's tax liability (110% for AGI above $150,000) through withholding and/or estimated payments.

Form 2210 is used by taxpayers to:

Answer: Calculate the underpayment of estimated tax penalty

Form 2210 is used to determine whether a taxpayer owes a penalty for underpaying estimated taxes and to calculate the penalty amount.