Accredited Wealth Management Advisor Practice Exam

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Study for the Accredited Wealth Management Advisor Exam. Master key concepts with flashcards and multiple-choice questions. Each question includes hints and explanations for a comprehensive review. Prepare confidently for your success!

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What is the minimum amount of estimated tax payments Sarah must pay in equal quarterly installments for this year?

$35,000
$10,000
$19,500
$23,000

The correct answer is: $19,500

To determine the minimum amount of estimated tax payments Sarah should make in equal quarterly installments, we need to focus on her tax liability for the year and the requirements for estimated tax payments. estimated tax payments are generally based on either the current year's expected tax liability or 100% (or 110% for higher income taxpayers) of the previous year’s tax liability, provided that the previous year was a full 12-month period and the taxpayer filed a return for that year. If Sarah's total tax liability for the current year is expected to be around $78,000, dividing that by four gives us approximately $19,500 as the amount of each quarterly installment. This method ensures that she meets her tax payment obligations and avoids underpayment penalties. This rationale supports the notion that the minimum estimated tax payment Sarah must make is indeed reflective of her expected tax liability divided into four equal installments, leading to the figure of $19,500.