Page 3 - Tax withholding and Estimated Taxes

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Publication 505 Schema: tipx Leadpct: 100% Pt. size: 8 12:15 - 17-Jun-2020
Cat. No. 15008E Contents
Department Tax Introduction . . . . . . . . . . . . . . . . . . 1
of the What's New for 2020 . . . . . . . . . . . . . 2
Treasury
Internal Withholding Reminders . . . . . . . . . . . . . . . . . . . 2
Revenue
Service and Estimated Chapter 1. Tax Withholding . . . . . . . . . 3
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for 2020 .
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Tax Salaries and Wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 8 9
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Tips .
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Taxable Fringe Benefits .
Sick Pay . . . . . . . . . . . . . . . . . . 9
Pensions and Annuities . . . . . . . . . 9
Gambling Winnings . . . . . . . . . . 12
For use in 2020 Unemployment Compensation . . . . . . . . . . . . . . 12
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Federal Payments .
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12
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Backup Withholding .
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Chapter 2. Estimated Tax for 2020 . . . 22
Who Does Not Have To Pay
Estimated Tax . . . . . . . . . . . 22
Who Must Pay Estimated Tax . . . . . 22
How To Figure Estimated Tax . . . . 24
When To Pay Estimated Tax . . . . . 26
How To Figure Each Payment . . . . 27
How To Pay Estimated Tax . . . . . . 30
How To Get Tax Help . . . . . . . . . . . 44
Index . . . . . . . . . . . . . . . . . . . . . 46
Introduction
The federal income tax is a pay-as-you-go tax.
You must pay the tax as you earn or receive in-
come during the year. There are two ways to
pay as you go.
• Withholding. If you are an employee, your
employer probably withholds income tax
from your pay. In addition, tax may be with-
held from certain other income, such as
pensions, bonuses, commissions, and
gambling winnings. The amount withheld is
paid to the IRS in your name.
• Estimated tax. If you don’t pay your tax
through withholding, or don’t pay enough
tax that way, you might have to pay esti-
mated tax. People who are in business for
themselves will generally have to pay their
tax this way. You may have to pay estima-
ted tax if you receive income such as divi-
dends, interest, capital gains, rents, and
royalties. Estimated tax is used to pay not
only income tax, but other taxes such as
self-employment tax and alternative mini-
mum tax.
This publication explains both of these meth-
ods. It also explains how to take credit on your
return for the tax that was withheld and for your
estimated tax payments.
If you didn’t pay enough tax during the year,
either through withholding or by making estima-
ted tax payments, you may have to pay a pen-
alty. Generally, the IRS can figure this penalty
Get forms and other information faster and easier at: for you.
• IRS.gov (English) • IRS.gov/Korean (한국어) Nonresident aliens. Before completing
• IRS.gov/Spanish (Español) • IRS.gov/Russian (Pусский) Form W-4, Employee's Withholding Certificate,
• IRS.gov/Chinese (中文) • IRS.gov/Vietnamese (TiếngViệt) nonresident alien employees should see Notice
Jun 17, 2020