What is the minimum threshold of tax liability that requires individuals to make estimated tax payments?

The correct threshold for individuals to make estimated tax payments is $1,000. This requirement comes into play when a taxpayer expects to owe at least that amount in tax for the current year after subtracting any withholding and refundable credits.

This threshold is important because it helps ensure that taxpayers are contributing to their tax liabilities throughout the year, rather than waiting until the end of the year to pay all at once. By making estimated payments, individuals can avoid underpayment penalties and manage their tax obligations more effectively.

The requirement is specifically aimed at individuals who do not have sufficient taxes withheld from their income, such as those who are self-employed or earn income that does not have tax withheld at the source. Understanding this threshold is crucial for taxpayers to stay compliant with IRS regulations and to avoid potential penalties for late or insufficient payments.