Page 12 - Tax withholding and Estimated Taxes

12:15 - 17-Jun-2020
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Fileid: … tions/P505/2020/A/XML/Cycle03/source
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
The amount withheld depends on whether holding allowances you can claim. The work- If your total income will be from $181,951 to
you receive payments spread out over more sheets are for your own records. Don’t give $200,000 ($351,401 and $400,000 if married fil-
than 1 year (periodic payments), within 1 year them to the payer of your pension or annuity. ing jointly), enter “1” on line D for each eligible
(nonperiodic payments), or as an eligible roll- Complete only one set of Form W-4P work- child.
over distribution (ERD). Income tax withholding sheets, no matter how many sources of income If your total income is higher than $200,000
from an ERD is mandatory. ERDs are dis- you have. If you are married and will file a joint ($400,000 if married filing jointly), enter “-0-” on
cussed under Eligible Rollover Distributions, return, complete only one set of worksheets for line D.
later. you and your spouse, even if you both earn wa- To see if your child is an eligible child for the
ges or receive pension or annuity payments and child tax credit, see the instructions for Depend-
Nontaxable part. The part of your pension or each must give Form W-4 or W-4P to your em- ents in the Form 1040 and 1040-SR instruc-
annuity that is a return of your investment in ployers or the payers of your pension or annuity tions.
your retirement plan (the amount you paid into payments. Complete separate sets of work- For more information about the child tax
the plan or its cost to you) isn’t taxable. Income sheets only if you and your spouse will file sep- credit, see the Instructions for Forms 1040 and
tax won’t be withheld from the part of your pen- arate returns. 1040-SR.
sion or annuity that isn’t taxable. The tax with- Complete all worksheets that apply to your Instead of using line D, you can choose to
held will be figured on, and can’t be more than, situation. The worksheets will help you figure take the child tax credit into account on line 1 of
the taxable part. the maximum number of withholding allowan- Worksheet 1-6A.
For information about figuring the part of ces you are entitled to claim so that the amount
your pension or annuity that isn’t taxable, see of income tax withheld from your periodic pay- Credit for other dependents (worksheet line
Pub. 575, Pension and Annuity Income. ments will match, as closely as possible, the E). If your total income will be less than
amount of income tax you will owe at the end of $72,351 ($105,051 if married filing jointly), enter
Periodic Payments the year. “1” on line E for each eligible dependent.
If your total income will be from $72,351 to
Withholding from periodic payments of a pen- Personal Allowances Worksheet $181,950 ($105,051 and $351,400 if married fil-
sion or annuity is figured similarly to withholding ing jointly), enter “1” on line E for every two de-
from certain salaries and wages. To tell the Use the Personal Allowances Worksheet on pendents (for example, you would enter -0- for
payer of your pension or annuity how much you page 4 of Form W-4P to figure your withholding one dependent, “1” if you have two or three de-
want withheld, fill out Form W-4P or a similar allowances based on all of the following that ap- pendents, or “2” if you have four dependents).
form provided by the payer. 2020 Form W-4P ply. If your total income will be higher than
has different entries and is completed differ- • Filing status. $181,950 ($351,400 if married filing jointly), en-
ently from the 2020 Form W-4. Withholding on • Child tax credit. ter -0- on line E.
2020 Form W-4P is figured under the same • Credit for other dependents. Instead of using line E, you can choose to
rules that are used in calculating withholding in • Other credits. take the credit for other dependents into ac-
2020 for employees who have a 2019 (or prior count on line 2 of Worksheet 1-6A.
year) Form W-4 in effect. Because the forms Filing Status (worksheet lines A, B, and C). To see who you can claim as a dependent
and lines on the 2020 Form W-4 and the 2020 Single or married but filing separately for the credit for other dependents, see the in-
Form W-4P are different this year, the rules dis- from your spouse. You can claim an allow- structions for Dependents in the Form 1040 and
cussed under Salaries and Wages, earlier, for ance for yourself. If you expect to file as single 1040-SR instructions. A dependent for purpo-
completing the 2020 Form W-4 should not be or married filing separately on your 2020 tax re- ses of the credit for other dependents also in-
used in completing the 2020 Form W-4P. See turn, enter “2” on line A of the worksheet. cludes an eligible child who had an ITIN but not
the instructions for the 2020 Form W-4P and an SSN by the due date of your 2020 return (in-
the following material for guidance in filling out Married filing jointly or qualifying cluding extensions).
your 2020 Form W-4P. widow(er). You can claim an allowance if you
will file as married filing jointly or qualifying Other credits (worksheet line F). Use Work-
Withholding Allowances widow(er). If you expect to file as married filing sheet 1-6A to figure the amount of other credits
jointly or qualifying widow(er) on your 2020 tax
to enter on line F. In addition to the child tax
The more allowances you claim on Form W-4P, return, enter “1” on line B of the worksheet. credit and credit for other dependents, you can
the less income tax your employer will withhold. Head of household. Generally, you can take your other credits into account when figur-
You will have the most tax withheld if you claim file as head of household if you are unmarried ing additional withholding allowances for 2020.
“0” allowances. The number of allowances you and pay more than half the cost of keeping up a See Table 1-2 .
can claim depends on the following factors. home that: Head of household filers can also use Work-
• Whether you will file as single, head of • Was the main home for all of 2020 of your sheet 1-6A to further reduce withholding.
household, married filing jointly, or married parent whom you can claim as your de-
filing separately. pendent, or Total personal allowances (worksheet line
• Whether you have income from more than • You lived in for more than half the year with G). Add lines A through F and enter the total on
one source. your qualifying child or any other person line G. If you don’t use either of the worksheets
• What credits you expect to claim for chil- whom you can claim as your dependent. on page 5 of Form W-4P, enter the number
dren and other dependents. from line G on line 2 of Form W-4P.
• What other credits you expect to claim for For more information, see Pub. 501.
the year. If you expect to file as head of household on Deductions, Adjustments,
• What deductions, adjustments, and nonw- your 2020 tax return, enter "1" on line C of the and Additional Income Worksheet
age income (such as dividends or interest) worksheet. In addition, see line 12 of Work-
you expect to have for the year. sheet 1-6A for an additional amount to enter on Use the Form W-4P Deductions, Adjustments,
line G of the Personal Allowances Worksheet. and Additional Income Worksheet if you plan to
If you are married (filing jointly), it also de- Child tax credit (worksheet line D). If your itemize your deductions or claim adjustments to
pends on whether your spouse also works or total income will be less than $72,351 the income on your 2020 tax return and you
receives pension or annuity payments and ($105,051 if married filing jointly), enter “4” on want to reduce your withholding. Also, use this
claims any allowances on his or her own Form line D for each eligible child. worksheet to figure out how much to increase
W-4P or withholding on his or her own Form If your total income will be from $72,351 to the tax withheld from your paycheck if you have
W-4. $181,950 ($105,051 and $351,400 if married fil- a large amount of nonwage income, such as in-
terest or dividends. Complete this worksheet
Form W-4P worksheets. Form W-4P has ing jointly), enter “2” on line D for each eligible when you have changes to those items to see if
child.
worksheets to help you figure how many with- you need to change your withholding.
Page 10 Chapter 1 Tax Withholding for 2020