Page 41 - 2020 Publication 17

14:38 - 19-Jan-2021
Page 39 of 138
Fileid: … ations/P17/2020/A/XML/Cycle03/source
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
between the military pay and civilian pay. Pay- holding you should claim for 2022, you must • You have nonwage income, such as inter-
ments to an employee who is on active duty for give your employer a new Form W-4 by Decem- est, dividends, alimony, unemployment
a period of more than 30 days will be subject to ber 1, 2021. If the event occurs in December compensation, or self-employment in-
income tax withholding, but not subject to social 2021, submit a new Form W-4 within 10 days. come.
security, Medicare, or federal unemployment • You will owe additional amounts with your
(FUTA) tax withholding. The wages and with- Checking Your Withholding return, such as self-employment tax.
holding will be reported on Form W-2, Wage
and Tax Statement. After you have given your employer a Form • Your withholding is based on obsolete
W-4, you can check to see whether the amount Form W-4 information for a substantial part
Determining Amount of Tax of tax withheld from your pay is too little or too of the year.
Withheld Using Form W-4 much. If too much or too little tax is being with- • You work only part of the year.
held, you should give your employer a new
The amount of income tax your employer with- Form W-4 to change your withholding. You • You change the amount of your withhold-
ing during the year.
holds from your regular pay depends on two should try to have your withholding match your
things. actual tax liability. If not enough tax is withheld, Cumulative wage method. If you change the
• The amount you earn in each payroll pe- you will owe tax at the end of the year and may amount of your withholding during the year, too
have to pay interest and a penalty. If too much
riod. tax is withheld, you will lose the use of that much or too little tax may have been withheld
for the period before you made the change. You
• The information you give your employer on money until you get your refund. Always check may be able to compensate for this if your em-
Form W-4. your withholding if there are personal or finan- ployer agrees to use the cumulative wage with-
Form W-4 includes steps to help you figure cial changes in your life or changes in the law holding method for the rest of the year. You
your withholding. Complete Steps 2 through 4 that might change your tax liability. must ask your employer in writing to use this
only if they apply to you. Note. You can’t give your employer a pay- method.
To be eligible, you must have been paid for
• Step 1. Enter your personal information in- ment to cover withholding on salaries and wa- the same kind of payroll period (weekly, bi-
cluding your filing status. ges for past pay periods or a payment for esti- weekly, etc.) since the beginning of the year.
• Step 2. Complete this step if you have mated tax.
more than one job at the same time or are Publication 505
married filing jointly and you and your Completing Form W-4 and
spouse both work. Worksheets To make sure you are getting the right amount
• Step 3. Complete this step if you claim de- of tax withheld, get Pub. 505. It will help you
pendents. Form W-4 has worksheets to help you figure the compare the total tax to be withheld during the
correct amount of withholding you can claim.
• Step 4. Complete this optional step to The worksheets are for your own records. Don't year with the tax you can expect to figure on
your return. It will also help you determine how
make other adjustments. give them to your employer. much, if any, additional withholding is needed
*Other income each payday to avoid owing tax when you file
*Deductions Multiple Jobs Worksheet. If you have income your return. If you don't have enough tax with-
*Extra withholding from more than one job at the same time, or are held, you may have to pay estimated tax, as ex-
married filing jointly and you and your spouse plained under Estimated Tax for 2021, later.
New Job both work, complete the Multiple Jobs Work- You can use the Tax Withholding Esti-
sheet on the Form W-4.
When you start a new job, you must fill out Form If you and your spouse expect to file sepa- TIP mator at IRS.gov/W4App, instead of
W-4 and give it to your employer. Your em- rate returns, figure your withholding using sepa- Pub. 505 or the worksheets included
ployer should have copies of the form. If you rate worksheets based on your own individual with Form W-4, to determine whether you need
need to change the information later, you must income, adjustments, deductions, and credits. to have your withholding increased or de-
fill out a new form. Deductions Worksheet. Use the Deductions creased.
If you work only part of the year (for exam- Worksheet on Form W-4 if you plan to itemize
ple, you start working after the beginning of the deductions or claim certain adjustments to in- Rules Your Employer Must Follow
year), too much tax may be withheld. You may come and you want to reduce your withholding.
be able to avoid overwithholding if your em- Also complete this worksheet when you have It may be helpful for you to know some of the
ployer agrees to use the part-year method. See changes to these items to see if you need to withholding rules your employer must follow.
Part-Year Method in chapter 1 of Pub. 505 for change your withholding. These rules can affect how to fill out your Form
more information. W-4 and how to handle problems that may
Employee also receiving pension income. Getting the Right Amount of Tax arise.
If you receive pension or annuity income and Withheld New Form W-4. When you start a new job,
begin a new job, you will need to file Form W-4 your employer should have you complete a
with your new employer. However, you can In most situations, the tax withheld from your Form W-4. Beginning with your first payday,
choose to split your withholding between your pay will be close to the tax you figure on your your employer will use the information you give
pension and job in any manner. return if you follow these two rules. on the form to figure your withholding.
• You accurately complete all the Form W-4 If you later fill out a new Form W-4, your em-
Changing Your Withholding worksheets that apply to you. ployer can put it into effect as soon as possible.
During the year, changes may occur to your • You give your employer a new Form W-4 The deadline for putting it into effect is the start
of the first payroll period ending 30 or more
marital status, adjustments, deductions, or when changes occur. days after you turn it in.
credits you expect to claim on your tax return. But because the worksheets and withhold-
When this happens, you may need to give your ing methods don't account for all possible situa- No Form W-4. If you don't give your employer
employer a new Form W-4 to change your with- tions, you may not be getting the right amount a completed Form W-4, your employer must
holding status. withheld. This is most likely to happen in the fol- withhold at the highest rate, as if you were sin-
Generally, you can submit a new Form W-4 lowing situations. gle.
whenever you wish to change the information • You are married and both you and your Repaying withheld tax. If you find you are
you entered on your Form W-4 for any reason. spouse work. having too much tax withheld because you
Changing your withholding for 2022. If • You have more than one job at a time. didn't claim the correct amount of withholding
events in 2021 will change the amount of with- you are entitled to, you should give your
Chapter 4 Tax Withholding and Estimated Tax Page 37