Publication 505 - Tax Withholding And Estimated Tax (Page 8 of 49) in pdf

Table 1.2

Net deductions and adjustments (worksheet

Deductions and Adjustments Worksheet.

line 7). If line 7 is less than $3,000 enter “0” on

Because they plan to itemize deductions and

Credit Table A

line 8. If line 7 is $3,000 or more, divide it by

claim adjustments to income, the Greens use

Married Filing Jointly

$3,000, drop any fraction, and enter the result on

this worksheet to see whether they are entitled

or Qualifying Widow(er)

line 8.

to additional allowances.

If combined

Multiply

The Greens’ estimated itemized deductions

estimated

credits

total $11,200, which they enter on line 1 of the

wages are:

by:

Two-Earner/Two-Job Worksheet

worksheet. Because they will file a joint return,

$0 to 29,000

10.0

they enter $7,850 on line 2. They subtract

You should complete this worksheet if you have

29,001 to 64,000

6.7

$7,850 from $11,200 and enter the result,

64,001 to 130,000

3.7

more than one job or are married and you and

$3,350, on line 3.

130,001 to 189,000

3.3

your spouse both work and the combined earn-

189,001 to 324,000

2.9

The Greens expect to have an adjustment to

ings from all jobs are more than $35,000.

over 324,000

2.6

income of $3,000 for their deductible IRA contri-

If you use this worksheet and your

butions. They do not expect to have any other

Credit Table B

earnings are more than $125,000

adjustments to income. They enter $3,000 on

Single

($175,000 if you are married), see Pub-

CAUTION

line 4.

lication 919 to check that you are having enough

If estimated

Multiply

The Greens add line 3 and line 4 and enter

tax withheld.

wages are:

credits by:

the total, $6,350, on line 5.

$0 to 14,000

10.0

Joyce and John expect to receive $600 in

14,001 to 36,000

6.7

Reducing your allowances (worksheet lines

interest and dividend income during the year.

36,001 to 75,000

3.7

1 – 3). On line 1 of the worksheet, enter the

They enter $600 on line 6 and subtract line 6

75,001 to 149,000

3.3

number from line H of the Personal Allowances

from line 5. They enter the result, $5,750, on line

149,001 to 315,000

2.9

Worksheet (or line 10 of the Deductions and

over 315,000

2.6

7. They divide line 7 by $3,000, and drop the

Adjustments Worksheet, if used). Using Table 1

fraction to determine one additional allowance.

Credit Table C

on the Form W – 4, find the number listed beside

They enter “1” on line 8.

Head of Household

the amount of your estimated wages for the year

The Greens enter “7” (the number from line H

from your lowest paying job (or if lower, your

of the Personal Allowances Worksheet) on line 9

If estimated

Multiply

spouse’s job). Enter that number on line 2.

wages are:

credits by:

and add it to line 8. They enter “8” on line 10.

Subtract line 2 from line 1 and enter the

$0 to 23,000

10.0

result (but not less than zero) on line 3 and on

Two-Earner/Two-Job

Worksheet.

The

23,001 to 50,000

6.7

50,001 to 110,000

3.7

Form W – 4, line 5. If line 1 is more than or equal

Greens use this worksheet because they both

110,001 to 170,000

3.3

to line 2, do not use the rest of the worksheet (or

work and together earn over $35,000. They

170,001 to 320,000

2.9

skip to line 8 if you expect to owe amounts other

enter “8” (the number from line 10 of the Deduc-

over 320,000

2.6

than income tax).

tions and Adjustments Worksheet) on line 1.

If line 1 is less than line 2, you should com-

Credit Table D

Next, they use Table 1 on the Form W – 4 to

Married Filing Separately

plete lines 4 through 9 of the worksheet to figure

find the number to enter on line 2 of the work-

the additional withholding needed to avoid un-

sheet. Because they will file a joint return and

If estimated

Multiply

derwithholding.

their expected wages from their lowest paying

wages are:

credits by:

job are $13,300, they enter “2” on line 2. They

$0 to 13,000

10.0

Other amounts owed. If you expect to owe

subtract line 2 from line 1 and enter “6” on line 3

13,001 to 30,000

6.7

amounts other than income tax, such as

of the worksheet and on Form W – 4, line 5.

30,001 to 63,000

3.7

self-employment tax, include them on line 8. The

John and Joyce Green can take a total of 6

63,001 to 93,000

3.3

total is the additional withholding needed for the

93,001 to 160,000

2.9

withholding allowances between them. They de-

over 160,000

2.6

year.

cide that John will take all 6 allowances on his

Form W – 4. Joyce, therefore, cannot claim any

Example 1.2. You are married and expect

allowances on hers. She will enter “0” on line 5

Example 1.3

to file a joint return for 2002. Your combined

of the Form W – 4 she gives to her employer.

estimated wages are $65,000. Your estimated

Joyce Green works in a bookstore and expects

Getting the Right Amount

tax credits include a child and dependent care

to earn about $13,300. Her husband, John,

credit of $960 and a mortgage interest credit of

of Tax Withheld

works full time at the Acme Corporation, where

$1,700.

his expected pay is $48,500. They file a joint

In Credit Table A, the number for your com-

In most situations, the tax withheld from your

income tax return and claim exemptions for their

bined estimated wages ($64,001 to $130,000) is

pay will be close to the tax you figure on your

two children. Because they file jointly, they use

3.7. Multiply your total estimated tax credits of

return if you follow these two rules.

only one set of Form W – 4 worksheets to figure

$2,660 by 3.7. Add the result, $9,842, to the

the number of withholding allowances. The

amount you would otherwise show on line 5 of

1) You accurately complete all the Form

Greens’ worksheets and John’s W – 4 are shown

the Deductions and Adjustments Worksheet

W – 4 worksheets that apply to you.

on the next page.

and enter the total on line 5. Because you

2) You give your employer a new Form W – 4

choose to account for your child and dependent

Personal Allowances Worksheet. On this

when changes occur.

care credit this way, you do not use line F of the

worksheet, John and Joyce claim allowances for

Personal Allowances Worksheet.

But because the worksheets and withholding

themselves and their children by entering “1” on

methods do not account for all possible situa-

line A, “1” on line C, and “2” on line D. Because

Nonwage income (worksheet line 6). Enter

tions, you may not be getting the right amount

both John and Joyce will receive wages of more

on line 6 your estimated total nonwage income

withheld. This is most likely to happen in the

than $1,000, they are not entitled to the addi-

(other than tax-exempt income). Nonwage in-

following situations.

tional withholding allowance on line B. The

come includes interest, dividends, net rental in-

•

Greens expect to have child and dependent

come, unemployment compensation, alimony

You are married and both you and your

care expenses of $2,400. They enter “1” on line

received, gambling winnings, prizes and

spouse work.

F of the worksheet. Because they are married,

awards, hobby income, capital gains, royalties,

•

You have more than one job at a time.

their total income will be between $20,000 and

and partnership income.

•

$65,000 and they have two eligible children,

If line 6 is more than line 5, you may not have

You have nonwage income, such as inter-

they enter “2” on line G.

enough income tax withheld from your wages.

est, dividends, alimony, unemployment

See Getting the Right Amount of Tax Withheld,

They enter their total personal allowances, 7,

compensation, or self-employment in-

later.

on line H.

come.

Page 8

Chapter 1 Tax Withholding for 2002

Publication 505 - Tax Withholding And Estimated Tax Page 8

Related Articles

Related forms

Related Categories