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Tax Topic 25 - Tax Withholding and Estimated Tax
Our federal income tax system is a pay-as-you-go tax. You must pay the tax as you receive the income during the year. In this tax topic you will learn how taxpayers get income withheld from their pay and other income such as pensions, bonuses, commissions, and gambling winnings. However, if no one withholds from your sources of income, you might have to pay estimated taxes such as when the taxpayer is business for himself or herself. A taxpayer may also have to pay estimated taxes on income such as dividends, interest, capital gains, rents, and royalties. In addition, you will learn how to take credit for the withholding on the tax return and calculate the penalties for not paying enough.  

Tax School Home Page

Student Instructions: Complete the following 3 steps:

  1. Read the reading material and answer the questions on this page.

  2. Assignment Pending...Submit the answers to the Assignment online (the questions on this page). Scroll down for all questions on this page. When you are ready to submit click on the Assignment link. (These questions may appear again on the quiz online).

  3. Complete a quiz on the reading material: Quiz Online. You have 60 minutes to complete 40 questions for this quiz. You must study the reading material. You won't have time to look up questions in the reading material. If you don't pass, you can retry only after 24 hours have passed. - Every time you try the questions will be different. You will be disqualified from completing this topic if you do not  allow the proper 24 hours in between tries. If you are disqualified, you will notified through email of the substitute topic to complete.

Important: If you fail a topic you can try again until you pass. However, you cannot try that same quiz or assignment again until 24 hours later. This will give you enough time to study and review the reading material.

Most forms are in Adobe Acrobat PDF format. Get Adobe ReaderYou will need Adobe Reader to view and print these forms. If you do not already have Adobe Reader installed on your computer, you may download the software for free.

 

Material needed to complete this assignment:

Please use IRS Publication 505, IRS Publication 515 and Form 1040 Instructions (Form 1040 instructions only up to page 98) to complete this tax topic.

Please note: Form 1040 Instructions (Form 1040 instructions only up to page 98) will be used for the rest of the topics in the initial tax preparer certification course. You will be responsible to answer questions from the Form 1040 instructions booklet (up to page 98) on every topic so read it carefully.

Tax Return Situation 1:

Prepare Form 1040 and Form 2210 (if needed) for Eleonor Gwen. She is single and has no dependents.

In tax year 2010 Eleonor did not have a tax liability. However, for 2011, Eleonor worries that she may owe a penalty for underpayment of her tax.

 

 

1. Look at the Form 1040 you prepared for Eleonor Gwen. What is the amount on Form 1040, Line 75?

A. $12,594.
B. $15,380.
C. $2,400. 
D. $12,850.

2. Look at the Form 1040 you prepared for Eleonor Gwen. What is the amount on Form 1040, Line 76?

A. $1,980.
B. $0.
 C. $240. 
D. $1,538.

 
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Revised: 11/22/17