Tax Law & Compliance Flashcards

A taxpayer with prior-year AGI above $150,000 avoids the estimated tax underpayment penalty by paying in at least what share of the prior year's tax?

Answer: 110%

Higher-income taxpayers must pay 110% of the prior year's tax, rather than 100%, to use the prior-year safe harbor.

Which form does an individual use to amend a previously filed Form 1040?

Answer: Form 1040-X

Form 1040-X is the Amended U.S. Individual Income Tax Return.

Filing Form 4868 does what for an individual taxpayer?

Answer: Extends the filing deadline by 6 months but not the payment deadline

Form 4868 gives an automatic six-month extension to file, but any tax due is still payable by the original due date.

For at least how long should employers keep employment tax records?

Answer: 4 years

The IRS requires employers to keep employment tax records for at least four years after the tax is due or paid, whichever is later.

Which form does a payer use to request a payee's correct taxpayer identification number?

Answer: Form W-9

Form W-9 is used to request and certify a U.S. person's TIN for information reporting.

What is the current federal backup withholding rate?

Answer: 24%

Backup withholding is currently 24% of reportable payments when a valid TIN is not provided.

The Trust Fund Recovery Penalty under IRC 6672 can hold a responsible person liable for what amount?

Answer: 100% of unpaid trust fund taxes

IRC 6672 imposes a penalty equal to the full amount of willfully unpaid withheld taxes on responsible persons.