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Patrick Von Radesky, an engineer with Century Power and Light, earns a gross income of $6,000 per month. Patrick is single, claims one exemption, and uses the standard deduction. Thoughtout last year, his company withheld $850 per month from his paycheck for federal income tax. Today in Jan 4. As Patrick's accountant, you just informed him that although his tax return is due at the IRS by April 15th, 90% of the income tax due for last year must be paid by Jan 15th; otherwise, a penalty will be imposed.

a) Calculate the amount of tax Patrick owes for the year.

b) Did his company withhold enough from each check to cover the 90% requirement?

c) How much should Patrick send the IRS by Jan 15th so that he will not be penalized?

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

e) If Patrick gets a 10% raise, all other factors being the same ho wmuch should he tell his payroll department to withhold from each month's check so that 90% of the tax due will be deducted?

Accounting Basics, Accounting

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