Question

Which of the following statements is false regarding corporate estimated tax payments?

A. The due dates for estimated tax payments are the 15th day of the 4th, 6th, 9th, and 12th months of the corporation's tax year.
B. Corporations must pay estimated taxes only if they have a federal income tax liability greater than $10,000.
C. Even though a corporation extends its tax return, it still must pay its tax liability for the year by three and one-half months after year-end.
D. Corporations using the annualized income method for determining estimated tax payments project their tax liability for the year based on income from the first, second, and third quarters.

Answer 1

The false statement regarding corporate estimated tax payments is that corporations only need to pay estimated taxes if they have a federal income tax liability greater than $10,000; in reality, the requirement starts at just $500 of expected federal income tax liability after withholding and credits.

Step-by-step explanation:

The false statement regarding corporate estimated tax payments is:

B. Corporations must pay estimated taxes only if they have a federal income tax liability greater than $10,000.

This is false because corporations are required to make estimated tax payments if they expect to owe at least $500 in federal income tax for the year after subtracting their federal income tax withholding and credits. Notice the discrepancy in the threshold for the requirement to make estimated tax payments.

The other statements are correct: The due dates for estimated tax payments are indeed the 15th day of the 4th, 6th, 9th, and 12th months of the corporation's tax year (A). Despite extending the tax return, corporations must still pay their tax liability by the due date, which is typically three and one-half months after the end of their tax year (C). When using the annualized income method, corporations project their tax liability for the year based on income up to that point in the year for calculating estimated payments (D).