Annex 1

Prior Year Tax Liability is $100

Quarter	Normal Estimated Payment	Tax Credits Purchased	Estimated Payment Made
1	$ 25	0	25
2	25	2	23
3	25	27	0
4	25	0	23
Total	100	29	71

If actual gross tax liability (before application of credits) at year end winds up being:	Tax Credit Applied	Net Tax Liability	Estimated Tax Payments Made	Refund/ (Tax. Due)
100	- 29	= 71	71	0
90	- 29	= 61	71	10
50	- 29	= 21	71	50
10	- 10*	= 0	71	71
105	- 29	= 76	71	(5)
135	- 29	= 106	71	(35)

1. Credits can only be applied to the extent of the liability.

Penalties and interest would be due since 71 is less than 90% of 106.