Utah General Contractors - Business and Law Practice Exam

What is the minimum estimated tax payment a sole proprietor, partner, or S-Corporation must expect to owe to be required to make payments?

1. $500

2. $750

3. $1,000

4. $2,000

The correct answer is: $1,000

The requirement for making estimated tax payments is based on the amount of tax that a taxpayer is anticipated to owe for the current tax year. For sole proprietors, partners, or S-Corporations, the threshold for being required to make estimated tax payments is set at $1,000. If the total tax owed after subtracting any available credits is expected to be $1,000 or more, the taxpayer must make estimated payments. The rationale behind this threshold is that it helps ensure that taxpayers are contributing towards their tax obligations throughout the year, rather than facing a significant payment due at tax time, which can be challenging for financial planning. This system encourages more consistent tax revenue collection for the government and allows taxpayers to spread out their tax payments. The other options reflect amounts that do not meet the minimum requirement for mandatory estimated tax payments, making them less applicable in this context.