Javier Ramirez, a successful software engineer for Miami–Dade Industries, earns a gross income of $6,000 per month. Javier is single, claims one exemption, and uses the standard deduction. Throughout last year, his company withheld $900 each month from his paycheck for federal income tax.

Today is January 4th. As Javier’s accountant, you just informed him that although his tax return is due at the IRS by April 15, 90% of the income tax due for last year must be paid by January 15, or a penalty would be imposed.

a. Calculate the amount of tax Javier owes for the year.

b. Did his company withhold enough from each paycheck to cover the 90% requirement?

c. How much should Javier send the IRS by January 15, so he will not be penalized?

d. If Javier waits until April 15 to send the balance of his taxes to the IRS, how much will he be penalized, if the penalty is 18% per year, or 1.5% per month on the shortfall up to 90%?

e. If Javier gets a 10% raise, all other factors being the same, how much should he tell his payroll department to withhold from each month’s paycheck so that 90% of the tax due will have been taken out?

Answer rating: 100% (QA)

Answer b Companys Withholding 85012 10200 90 Requirement 102... View the full answer