Page 4 - Tax withholding and Estimated Taxes

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
1392, Supplemental Form W-4 Instructions for (CARES) Act permits self-employed individuals you may want to consider filing a new Form
Nonresident Aliens (Rev. January 2020), which making estimated tax payments to defer the W-4.
provides nonresident aliens who are not exempt payment of 50% of the social security tax on net Lifetime learning credit income limits. In or-
from withholding instructions for completing earnings from self-employment imposed for the der to claim a lifetime learning credit, your modi-
Form W-4, and the Instructions for Form 8233, period beginning on March 27, 2020, and end- fied adjusted gross income (MAGI) must be
Exemption From Withholding on Compensation ing December 31, 2020. This means that 50% less than $59,000 ($118,000 if married filing
for Independent (and Certain Dependent) Per- of the social security tax imposed on net earn- jointly).
sonal Services of a Nonresident Alien Individ- ings from self-employment earned during the
ual. Also, see chapter 8 of Pub. 519, U.S. Tax period beginning on March 27, 2020, and end- Retirement savings contribution credit in-
Guide for Aliens, for important information on ing December 31, 2020, is not used to calculate come limits increased. In order to claim this
withholding. the installments of estimated tax due. credit for 2020, your MAGI must be less than
Proposed regulations on income tax Additionally, the Families First Coronavirus $32,500 ($65,000 if married filing jointly;
$48,750 if head of household).
withholding. Proposed regulations on income Relief Act (FFCRA) helps self-employed individ-
tax withholding were published in the Federal uals affected by coronavirus by providing paid Adoption credit or exclusion. The maximum
Register on February 13, 2020 (at 85 FR 8344). sick leave and paid family leave credits equiva- adoption credit or exclusion for employer-provi-
Employees and employers may rely on these lent to those that employers are required to pro- ded adoption benefits has increased to
proposed regulations. vide their employees for qualified sick leave wa- $14,300. In order to claim either the credit or ex-
ges and qualified family leave wages paid clusion, your MAGI must be less than $254,520.
Comments and suggestions. We welcome during the period beginning April 1, 2020, and Earned income credit (EIC). You may be
your comments about this publication and your ending December 31, 2020. The FFCRA allows able to take the EIC in 2020 if:
suggestions for future editions. self-employed individuals to claim credits for up • Three or more children lived with you and
You can send us comments through to 10 days of “paid sick leave” if they are unable you earned less than $50,954 ($56,844 if
IRS.gov/FormComments. Or, you can write to: to work or telework due to circumstances rela- married filing jointly),
ted to coronavirus and up to 50 days of “paid
Internal Revenue Service, Tax Forms and Pub- • Two children lived with you and you
lications, 1111 Constitution Ave. NW, IR-6526, family leave” if they are unable to work or tele- earned less than $47,440 ($53,330 if mar-
work because they are caring for a child due to
Washington, DC 20224. circumstances related to coronavirus. Eligible ried filing jointly),
Although we can’t respond individually to self-employed individuals may fund these sick • One child lived with you and you earned
each comment received, we do appreciate your leave and family leave equivalents by taking less than $41,756 ($47,646 if married filing
feedback and will consider your comments as into account the credit to which the individual is jointly), or
we revise our tax forms, instructions, and publi- entitled and will claim on Form 1040 or • A child didn’t live with you and you earned
cations. We can’t answer tax questions sent to 1040-SR in determining required estimated tax less than $15,820 ($21,710 if married filing
the above address. payments. This means that an eligible self-em- jointly).
Tax questions. If you have a tax question ployed individual can effectively reduce pay- Also, the maximum MAGI you can have and
not answered by this publication or the How To ments of estimated income taxes that the indi- still get the credit has increased. You may be
Get Tax Help section at the end of this publica- vidual would otherwise be required to make if able to take the credit if your MAGI is less than
tion, go to the IRS Interactive Tax Assistant the individual was not entitled to the credit on the amount in the above list that applies to you.
page at IRS.gov/Help/ITA where you can find Form 1040 or 1040-SR. More information on The maximum investment income you can have
topics using the search feature or by viewing the credits will be available later this year at and get the credit is $3,650 for 2020.
the categories listed. Coronavirus Tax Relief and Economic Impact
Payments on IRS.gov.
Getting tax forms, instructions, and pub-
lications. Visit IRS.gov/Forms to download Publication 505 changes. Chapters 3 and 4 Reminders
current and prior-year forms, instructions, and have been removed. You can find most of the
publications. information previously found in those chapters Future developments. The IRS has created a
in the Instructions for Form 2210. page on IRS.gov for information about Pub. 505
Ordering tax forms, instructions, and Extended tax provisions. Recent legislation at IRS.gov/Pub505. Information about any fu-
publications. Go to IRS.gov/OrderForms to extended certain tax benefits that had expired ture developments affecting Pub. 505 (such as
order current forms, instructions, and publica- at the end of 2017 through 2020. These tax legislation enacted after we release it) will be
tions; call 800-829-3676 to order prior-year benefits include the following. posted on that page.
forms and instructions. Your order should arrive • Tuition and fees deduction. Social security tax. Generally, each employer
within 10 business days. • Deduction for mortgage insurance premi- for whom you work during the tax year must
ums. withhold social security tax up to the annual
• Nonbusiness energy property credit. limit. The annual limit is $137,700 in 2020.
What's New for 2020 • Alternative fuel vehicle refueling credit. Individual taxpayer identification number
• Indian employment credit.
Use your 2019 tax return as a guide in figuring Form W-4 revised. Form W-4, Employee's (ITIN) renewal. If you were assigned an ITIN
before January 1, 2013, or if you have an ITIN
your 2020 estimated tax, but be sure to Withholding Certificate, has been revised for that you haven’t included on a tax return in the
consider the following. 2020 to help more easily and accurately figure last 3 consecutive years, you may need to re-
Extended due date. Pursuant to Notice the correct amount of your withholding. The new it. For more information, see the Instruc-
2020-18, the due date for your first estimated new form does not use “withholding allowan- tions for Form W-7.
tax payment is automatically postponed from ces.” Advance payments of the premium tax
April 15, 2020, to July 15, 2020. Likewise, pur- Standard deduction amount increased. For credit. If you buy health insurance through the
suant to Notice 2020-23, the due date for your 2020, the standard deduction amount has been Health Insurance Marketplace, you may be eli-
second estimated tax payment is automatically increased for all filers, and the amounts are as gible to have advance payments of the pre-
postponed from June 15, 2020, to July 15, follows. mium tax credit paid on your behalf to the insur-
2020. • Single or Married Filing Sepa- ance company. Receiving too little or too much
For more information, and to see if this relief rately—$12,400. in advance will affect your refund or balance
gets updated, see Filing and Payment • Married Filing Jointly or Qualifying due. Promptly report changes in your income or
Deadlines Questions and Answers on IRS.gov. Widow(er)—$24,800. family size to your Marketplace. See Form 8962
Coronavirus tax relief for self-employed in- • Head of Household—$18,650. and its instructions for more information.
dividuals paying estimated taxes. Corona- Due to the increase in the standard deduc- Additional Medicare Tax. Generally, a 0.9%
virus Aid, Relief, and Economic Security tion and reduced usage of itemized deductions, Additional Medicare Tax applies to Medicare
Page 2 Publication 505 (2020)