Page 13 - Tax withholding and Estimated Taxes

12:15 - 17-Jun-2020
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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Use the amount of each item you reasona- • Deductible expenses related to income re- Other amounts owed. If you expect to owe
bly can expect to show on your return. How- ported on Schedule 1 (Form 1040 or amounts other than income tax, such as
ever, don’t use more than: 1040–SR), line 8, from the rental of per- self-employment tax, include them on line 8.
• The amount shown for that item on your sonal property engaged in for profit. The total is the additional withholding needed
2019 return (or your 2018 return if you • Repayment of certain supplemental unem- for the year.
haven’t yet filed your 2019 return), plus ployment benefits.
• Any additional amount related to a transac- • Contributions to pension plans. Note. Use Form W-4, not Form W-4P, if
tion or occurrence (such as payments al- • Contributions by certain chaplains to plans. you receive any of the following.
ready made, the signing of an agreement, • Attorney fees and court costs for certain • Military retirement pay.
or the sale of property) that has happened unlawful discrimination claims. • Payments from certain nonqualified defer-
or will happen during 2019 or 2020. • Attorney fees and court costs for certain red compensation plans. These are em-
Don’t include any amount shown on your last whistleblower awards. ployer plans that pay part of your compen-
sation at a later time, but are not
tax return that has been disallowed by the IRS. • Estimated amount of decrease in tax attrib-
utable to income averaging using Sched- tax-qualified deferred compensation plans.
Not itemizing deductions. If you expect to ule J (Form 1040 or 1040-SR). See Nonqualified Deferred Compensation
claim the standard deduction on your tax return, • Educator expenses. and Section 457 Plans in Pub. 957, Re-
skip lines 1 and 2, and enter “-0-” on line 3 of porting Back Pay and Special Wage Pay-
the worksheet. Nonwage income (worksheet line 6). Enter ments to the Social Security Administra-
on line 6 your estimated total nonwage income tion.
Itemized deductions (worksheet line 1). En- (other than tax-exempt income). Nonwage in-
ter your estimated total itemized deductions on come includes interest, dividends, net rental in- Withholding rules. The withholding rules for
line 1 of the worksheet. come, unemployment compensation, gambling pensions and annuities differ from those for sal-
Listed below are some of the deductions winnings, prizes and awards, hobby income, aries and wages in the following ways.
you can take into account when figuring addi- capital gains, royalties, and partnership income. • If you don’t fill out a withholding certificate,
tax will be withheld as if you were married
tional withholding allowances for 2020. You nor- If line 6 is more than line 5, you may not and claiming three withholding allowances.
mally claim these deductions on Schedule A have enough income tax withheld from your wa- • You can choose not to have tax withheld,
(Form 1040 or 1040-SR). For a full list of item- ges. See Getting the Right Amount of Tax With- regardless of how much tax you owed last
ized deductions, see the 2019 Instructions for held. year or expect to owe this year. You don’t
Schedule A (Form 1040 or 1040-SR) and have to qualify for exemption. See Choos-
What’s New for 2020, earlier. Net deductions and adjustments (work- ing Not To Have Income Tax Withheld,
sheet line 8). Divide the amount on line 7 by
1. Medical and dental expenses that are $4,300, drop any fraction, and enter the amount later.
more than 7.5% of your 2020 adjusted on line 8. If it's a negative amount, enter it in pa- • If you don’t give the payer your SSN in the
gross income (AGI) (defined under Expec- rentheses. required manner or the IRS notifies the
ted AGI, later). payer before any payment or distribution is
Example. If line 7 is $5,200, $5,200 ÷
2. State and local income or property taxes $4,300 = 1.2. Drop the fraction (0.2) and enter made that you gave an incorrect SSN, tax
will be withheld as if you were single and
(up to $10,000). “1” on line 8. were claiming no withholding allowances.
3. Deductible home mortgage interest.
4. Investment interest up to net investment Multiple Pensions/ Effective date of withholding certificate. If
you give your withholding certificate (Form
income. More-Than-One-Income Worksheet W-4P or a similar form) to the payer on or be-
5. Charitable contributions. Complete the Multiple Pensions/ fore the date your payments start, it will be put
6. Casualty and theft losses attributable to a More-Than-One-Income Worksheet on page 5 into effect by the first payment made more than
30 days after you submit the certificate.
federally declared disaster that are more of Form W-4P if you (and your spouse if married
than $100 and 10% of your AGI. filing jointly) have more than one source of in- If you give the payer your certificate after
come subject to withholding (for example, more your payments start, it will be put into effect with
Adjustments to income (worksheet line 4). than one pension, or a pension and a job, or if the first payment, which is at least 30 days after
Enter your estimated total adjustments to in- you have a pension and your spouse works). you submit it. However, the payer can elect to
come on line 4 of the Deductions, Adjustments, put it into effect earlier.
and Additional Income Worksheet. Reducing your allowances (worksheet lines
You can take the following adjustments to 1–3). On line 1 of the worksheet, enter the Nonperiodic Payments
income into account when figuring additional number from line G of the Personal Allowances
withholding allowances for 2020. Worksheet (or line 10 of the Deductions, Adjust- Tax will be withheld at a flat 10% rate on any
• Net losses from Schedules C, D, E, and F ments, and Additional Income Worksheet, if nonperiodic payments you receive, unless you
of Form 1040 or 1040-SR and from Part II used). Using Table 1 in the Multiple Pensions/ tell the payer not to withhold.
of Form 4797, line 18b. More-Than-One-Income Worksheet, find the
• Net operating loss carryovers. number that applies to the lowest-paying pen- Use Form W-4P, line 3, to specify that an
• Certain business expenses of reservists, sion or job and enter it on line 2. If you are mar- additional dollar amount be withheld. You can
performing artists, and fee-based govern- ried filing jointly and the amount from the high- also use Form W-4P, line 1, to choose not to
ment officials. est-paying pension or job is $75,000 or less and have tax withheld. If you want to revoke a
• Health savings account or medical savings the combined amounts for you and your spouse choice not to have tax withheld, see Choosing
account deduction. are $107,000 or less, don't enter more than “7.” Not To Have Income Tax Withheld, later.
• Certain moving expenses for members of If line 1 is more than or equal to line 2, sub- You may need to use Form W-4P to
the Armed Forces on active duty. tract line 2 from line 1. Enter the result on line 3 ! ask for additional withholding. If you
• Deduction for self-employment tax. (if zero or less, enter -0-) and on Form W-4P, CAUTION don’t have enough tax withheld, you
• Deduction for contributions to self-em- line 2. Don't use the rest of the worksheet. may need to pay estimated tax, as explained in
ployed SEP, and qualified SIMPLE plans. If line 1 is less than line 2, enter “-0-” on chapter 2.
• Self-employed health insurance deduction. Form W-4P, line 2. Then, complete lines 4
• Penalty on early withdrawal of savings. through 9 of the worksheet to figure the addi-
• IRA deduction. tional withholding needed to avoid underwith-
• Student loan interest deduction. holding.
• Jury duty pay given to your employer.
• Reforestation amortization and expenses.
Chapter 1 Tax Withholding for 2020 Page 11