Compute Lenny’s estimated tax payment for the third quarter. He is self employed and he expects to earn 42,800 this year. His estimated income tax rate is 18%
To compute Lenny's estimated tax payment for the third quarter, we first need to calculate his estimated annual tax liability.
Given that his expected income for the year is $42,800 and his estimated income tax rate is 18%, we can calculate his estimated annual tax liability as follows:
Estimated Annual Tax Liability = Expected Income * Income Tax Rate
Estimated Annual Tax Liability = $42,800 * 18%
Estimated Annual Tax Liability = $7,704
Now, since Lenny is required to make estimated tax payments quarterly, we need to divide his estimated annual tax liability by 4 to get his estimated quarterly tax payment:
Estimated Quarterly Tax Payment = Estimated Annual Tax Liability / 4
Estimated Quarterly Tax Payment = $7,704 / 4
Estimated Quarterly Tax Payment = $1,926
Therefore, Lenny's estimated tax payment for the third quarter would be $1,926.