Julie is a self-employed electrician. In 2020 she had an AGI of $100,000 and tax liability of $20,000. During 2021 she estimates that her net earnings from Self-Employment will be $150,000 and tax liability after all deductions to be $30,000.

a. What is the minimum amount Julie can pay in estimated taxes to avoid incurring interest and penalties?

b. Assume Julie files for an extension in April and that the estimated tax liability remains $30,000. Assume she made the minimum required tax payments to avoid a penalty throughout the year and paid any estimated amount remaining with the extension request. When she files the actual return 2 months later she determine the actual 2021 tax liability was $25,000. How much did Julie pay with the extension to file? What is Julie’s net due/(refunded) when she files the actual return?

c. What is Julie’s self-employment tax for 2021?

Answer rating: 100% (QA)

Answer a Smaller of 100 of last year tax liability or 90 of this year esti... View the full answer