Question

Blue corporation files tax returns on a fiscal year ending 3/31. It owes federal income tax of $100,000 for the current year. Last year it paid federal taxes of $200,000.

1. Is the corporation required to pay estimated taxes this year? Why or why not?

2. If yes, what are the due dates of the payments?

3. What is the minimum amount, if any the company must pay on those dates to avoid penalties?

Answer 1

A) As per Internal Revenue Service,  An Assessee are required for quarterly estimated tax payments for calendar year if both of the following apply:

1. An Assessee is expect to owe at least $1,000 in federal tax , after subtracting federal tax withholding and refundable credits,

and

2. An Assessee expect federal withholding and refundable credits to be less than the smaller of:

• 90% of the tax to be shown on your federal tax return, or
• 100% of the tax shown on your preceding year federal tax return.

Since, Blue Corporation is oexpect to owe at least $1,000 in fedral tax and he his expect feseral withholding is less than 100% of the tax shown on your preceding year federal tax return. Hence, Blue Corporation is liable to pay estimated tax.

B) Due Date of Payment of Tax

Period	Due Date
1st jan to 31st Mar	15th April
1st Apr to 31st May	15th June
1st June to 30th August	15th September
1st September to 31st December	15th Jan

C) Penalty imposed for late payment of taxes unless

1. Underpayment for year < $1000

2. Payments ≥ 90% of current year’s liability

3. Taxes paid ≥ 100% of prior year’s liability (110% for taxpayers with AGI > $150,000)