Publication 505 - Tax Withholding And Estimated Tax (Page 4 of 49) in pdf

W – 4S Request for Federal Income Tax

3) Whether you want an additional amount

Withholding From Sick Pay

withheld.

W – 4V Voluntary Withholding Request

If your income is low enough that you will not

have to pay income tax for the year, you may be

See chapter 5 of this publication for informa-

exempt from withholding. This is explained

tion about getting these publications and forms.

under Exemption From Withholding, later.

Tax Withholding

Note. You must specify a filing status and a

number of withholding allowances on Form

Salaries and Wages

for 2002

W – 4. You cannot specify only a dollar amount

of withholding.

Income tax is withheld from the pay of most

New job. When you start a new job, you must

employees. Your pay includes your regular pay,

Important Changes

fill out a Form W – 4 and give it to your employer.

bonuses, commissions, and vacation al-

Your employer should have copies of the form. If

lowances. It also includes reimbursements and

you need to change the information, you must fill

other expense allowances paid under a nonac-

Certain withholding rates decreased. The

out a new form.

countable plan. See Supplemental Wages,

withholding rates on the following items have

If you work only part of the year (for example,

later, for more information about reimburse-

been decreased.

you start working after the beginning of the

ments and allowances paid under an accounta-

year), too much tax may be withheld. You may

ble plan.

1) Gambling winnings. The rate has de-

be able to avoid overwithholding if your em-

creased from 28% to 27%.

ployer agrees to use the part-year method, ex-

Military retirees. Military retirement pay is

2) Unemployment compensation. The rate

plained later.

treated in the same manner as regular pay for

has decreased from 15% to 10%

income tax withholding purposes, even though it

Changing your withholding. Events during

is treated as a pension or annuity for other tax

the year may change your marital status or the

3) Federal payments. Withholding on certain

purposes.

exemptions, adjustments, deductions, or credits

federal payments is voluntary. The elective

you expect to claim on your return. When this

rates have been decreased to 7%, 10%,

Household workers. If you are a household

happens, you may need to give your employer a

15%, and 27%.

worker, you can ask your employer to withhold

new Form W – 4 to change your withholding sta-

income tax from your pay. A household worker is

4) Backup withholding. The rate has de-

tus or number of allowances.

an employee who performs household work in a

creased from 31% to 30%.

You must give your employer a new Form

private home, local college club, or local frater-

W – 4 within 10 days after either of the following.

5) Supplemental wages. The rate has de-

nity or sorority chapter.

creased from 28% to 27%.

Tax is withheld only if you want it withheld

1) Your divorce, if you have been claiming

and your employer agrees to withhold it. If you

married status.

do not have enough income tax withheld, you

2) Any event that decreases the number of

may have to make estimated tax payments, as

withholding allowances you can claim.

Introduction

discussed in chapter 2.

Events that will decrease the number of with-

This chapter discusses withholding on these

Farmworkers. Income tax is generally with-

holding allowances you can claim include the

held from your cash wages for work on a farm

types of income:

following.

unless your employer both:

•

Salaries and wages,

1) You have been claiming an allowance for

•

1) Pays you cash wages of less than $150

your spouse, but you get divorced or your

Tips,

during the year, and

spouse begins claiming his or her own al-

•

Taxable fringe benefits,

lowance on a separate Form W – 4.

2) Has expenditures for agricultural labor to-

•

Sick pay,

taling less than $2,500 during the year.

2) You have been claiming an allowance for

•

a dependent, but you no longer expect to

Pensions and annuities,

If you receive either noncash wages or cash

provide more than half the dependent’s

•

wages not subject to withholding, you can ask

Gambling winnings,

support for the year.

your employer to withhold income tax. If your

•

Unemployment compensation, and

employer does not agree to withhold tax, or if not

3) You have been claiming an allowance for

•

enough is withheld, you may have to make esti-

your child, but you now find that he or she

Federal payments.

mated tax payments, as discussed in chapter 2.

will earn more than $3,000 during the year.

This chapter explains in detail the rules for with-

In addition, he or she will be:

holding tax from each of these types of income.

Determining Amount

a) 24 or older by the end of the year, or

The discussion of salaries and wages includes

of Tax Withheld

an explanation of how to complete a Form W – 4.

b) 19 or older by the end of the year and

The amount of income tax your employer with-

will not qualify as a student.

This chapter also covers backup withholding

holds from your regular pay depends on two

on interest, dividends, and other payments.

things.

4) You have been claiming allowances for

your expected deductions, but you now

Useful Items

1) The amount you earn.

find that they will be less than you ex-

You may want to see:

pected.

2) The information you give your employer on

Form W – 4.

Publication

Generally, you can submit a new Form W – 4

whenever you wish to change the number of

Form W – 4 includes three types of informa-

919

How Do I Adjust My Tax

your withholding allowances for any other rea-

tion that your employer will use to figure your

Withholding?

son.

withholding.

If you change the number of your withholding

Form (and Instructions)

1) Whether to withhold at the single rate or at

allowances, you can request that your employer

W – 4 Employee’s Withholding Allowance

the lower married rate.

withhold using the cumulative wage method,

Certificate

explained later.

2) How many withholding allowances you

W – 4P Withholding Certificate for

claim (each allowance reduces the amount

Changing your withholding for 2003. If

Pension or Annuity Payments

withheld).

events in 2002 will decrease the number of your

Page 4

Chapter 1 Tax Withholding for 2002

Publication 505 - Tax Withholding And Estimated Tax Page 4

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