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previous page Previous Page: Publication 505 - Tax Withholding and Estimated Tax - Tax Withholding and Estimated Tax
next page Next Page: Publication 505 - Tax Withholding and Estimated Tax - Tips
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication
taxmap/pubs/p505-001.htm#en_us_publink10007179

Chapter 1
Tax Withholding for 2009(p4)

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Tax Withholding for 2009

taxmap/pubs/p505-001.htm#TXMP7f1b2ff5Introduction

This chapter discusses income tax withholding on: This chapter explains in detail the rules for withholding tax from each of these types of income. The discussion of salaries and wages includes an explanation of how to complete Form W-4.
This chapter also covers backup withholding on interest, dividends, and other payments.

taxmap/pubs/p505-001.htm#TXMP780bf804

Useful items

You may want to see:


Publication
 919 How Do I Adjust My Tax Withholding?
Form (and Instructions)
 W-4: Employee's Withholding Allowance Certificate
 W-4P: Withholding Certificate for Pension or Annuity Payments
 W-4S: Request for Federal Income Tax Withholding From Sick Pay
 W-4V: Voluntary Withholding Request
See chapter 5 of this publication for information about getting these publications and forms.
taxmap/pubs/p505-001.htm#en_us_publink10007182

Salaries and Wages(p4)


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previous topic occurrence Compensation, Wage, Salary next topic occurrence

Income tax is withheld from the pay of most employees. Your pay includes your regular pay, bonuses, commissions, and vacation allowances. It also includes reimbursements and other expense allowances paid under a nonaccountable plan. See Supplemental Wages on page 13 for definitions of accountable and nonaccountable plans.
If your income is low enough that you will not have to pay income tax for the year, you may be exempt from withholding. This is explained under Exemption From Withholding on page 13.
taxmap/pubs/p505-001.htm#en_us_publink10007183

Military retirees.(p4)


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Military retirement pay is treated in the same manner as regular pay for income tax withholding purposes, even though it is treated as a pension or annuity for other tax purposes.
taxmap/pubs/p505-001.htm#en_us_publink10007184

Household workers.(p4)


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If you are a household worker, you can ask your employer to withhold income tax from your pay. A household worker is an employee who performs household work in a private home, local college club, or local fraternity or sorority chapter.
Tax is withheld only if you want it withheld and your employer agrees to withhold it. If you do not have enough income tax withheld, you may have to pay estimated tax, as discussed in chapter 2.
taxmap/pubs/p505-001.htm#en_us_publink10007185

Farmworkers.(p4)


rule
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Generally, income tax is withheld from your cash wages for work on a farm unless your employer both:
taxmap/pubs/p505-001.htm#en_us_publink1000145931

Differential wage payments.(p4)


rule
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When employees are on leave from employment for military duty, some employers make up the difference between the military pay and civilian pay. Payments made after December 31, 2008, to an employee who is on active duty for a period of more than 30 days, will be subject to income tax withholding. The wages and withholding will be reported on Form W-2.
You can ask your employer to withhold income tax from noncash wages and other wages not subject to withholding. If your employer does not agree to withhold tax, or if not enough is withheld, you may have to pay estimated tax, as discussed in chapter 2.
taxmap/pubs/p505-001.htm#en_us_publink10007186

Determining Amount of Tax 
Withheld Using Form W-4(p4)


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previous topic occurrence Determining Amount of Tax Withheld Using Form W-4 next topic occurrence

The amount of income tax your employer withholds from your regular pay depends on two things.
Form W-4 includes three types of information that your employer will use to figure your withholding.
Note.You must specify a filing status and a number of withholding allowances on Form W-4. You cannot specify only a dollar amount of withholding.
taxmap/pubs/p505-001.htm#en_us_publink10007188

New Job(p4)


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previous topic occurrence New Job next topic occurrence

When you start a new job, you must fill out a Form W-4 and give it to your employer. Your employer should have copies of the form. If you need to change the information later, you must fill out a new form.
If you work only part of the year (for example, you start working after the beginning of the year), too much tax may be withheld. You may be able to avoid overwithholding if your employer agrees to use the part-year method, explained on page 12.
taxmap/pubs/p505-001.htm#en_us_publink10007189

Employee also receiving pension income.(p4)


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If you receive pension or annuity income and begin a new job, you will need to file Form W-4 with your new employer. However, you can choose to split your withholding allowances between your pension and job in any manner. See Publication 919 for more information.
taxmap/pubs/p505-001.htm#en_us_publink10007190

Changing Your Withholding(p4)


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previous topic occurrence Changing Your Withholding next topic occurrence

Events during the year may change your marital status or the exemptions, adjustments, deductions, or credits you expect to claim on your tax return. When this happens, you may need to give your employer a new Form W-4 to change your withholding status or number of allowances.
If the event changes your withholding status or the number of allowances you are claiming, you must give your employer a new Form W-4 within 10 days after either of the following.
Events that will decrease the number of withholding allowances you can claim include the following.
Generally, you can submit a new Form W-4 whenever you wish to change the number of your withholding allowances for any other reason.
If you change the number of your withholding allowances, you can request that your employer withhold using the cumulative wage method, explained on page 12.
taxmap/pubs/p505-001.htm#en_us_publink10007191

Changing your withholding for 2010.(p5)


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If events in 2009 will decrease the number of your withholding allowances for 2010, you must give your employer a new Form W-4 by December 1, 2009. If an event occurs in December 2009, submit a new Form W-4 within 10 days. The following are examples of events that will decrease the number of your allowances.
Note.Because you can file a joint return for 2009, your spouse's death will not affect the number of your withholding allowances until 2010. You will have to change from married to single status for 2010, unless you can file as a qualifying widow or widower because you have a dependent child, or you remarry.
You must file a new Form W-4 showing single status by December 1 of the last year you are eligible to file as qualifying widow or widower.
taxmap/pubs/p505-001.htm#en_us_publink10007193

Checking Your Withholding(p5)


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previous topic occurrence Checking Your Withholding next topic occurrence

After you have given your employer a Form W-4, you can check to see whether the amount of tax withheld from your pay is too little or too much. See Publication 919 beginning on page 12. If too much or too little tax is being withheld, you should give your employer a new Form W-4 to change your withholding.
Note.You cannot give your employer a payment to cover federal income tax withholding on salaries and wages for past pay periods or a payment for estimated tax.
taxmap/pubs/p505-001.htm#en_us_publink10007195

Completing Form W-4 
and Worksheets(p5)


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previous topic occurrence Employee's Withholding Allowance Certificate next topic occurrence

When reading the following discussion, you may find it helpful to refer to the filled-in Form W-4 on pages 10 and 11.
taxmap/pubs/p505-001.htm#en_us_publink10007196

Marital Status 
(Line 3 of Form W-4)(p5)


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There is a lower withholding rate for people who qualify to check the "Married" box on line 3 of Form W-4. Everyone else must have tax withheld at the higher single rate.
taxmap/pubs/p505-001.htm#en_us_publink10007197

Single.(p5)


rule
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You must check the "Single" box if any of the following applies.
taxmap/pubs/p505-001.htm#en_us_publink10007198

Married.(p5)


rule
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You qualify to check the "Married" box if any of the following applies.
taxmap/pubs/p505-001.htm#en_us_publink10007199

Married, but withhold at higher single rate.(p5)


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Some married people find that they do not have enough tax withheld at the married rate. This can happen, for example, when both spouses work. To avoid this, you can check the "Married, but withhold at higher Single rate" box (even if you qualify for the married rate). Also, you may find that more tax is withheld if you fill out the Two-Earners/Multiple Jobs Worksheet, explained on page 9.
taxmap/pubs/p505-001.htm#en_us_publink10007200

Withholding Allowances 
(Line 5 of Form W-4)(p5)


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previous topic occurrence Withholding Allowances next topic occurrence

The more allowances you claim on Form W-4, the less income tax your employer will withhold. You will have the most tax withheld if you claim "0" allowances. The number of allowances you can claim depends on the following factors. If you are married, it also depends on whether your spouse also works and claims any allowances on his or her own Form W-4.
taxmap/pubs/p505-001.htm#en_us_publink10007201

Form W-4 worksheets.(p5)


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Form W-4 has worksheets to help you figure how many withholding allowances you can claim. The worksheets are for your own records. Do not give them to your employer.
Complete only one set of Form W-4 worksheets, no matter how many jobs you have. If you are married and will file a joint return, complete only one set of worksheets for you and your spouse, even if you both earn wages and each must give a Form W-4 to your employers. Complete separate sets of worksheets only if you and your spouse will file separate returns.
If you are not exempt from withholding (see Exemption From Withholding on page 13), complete the Personal Allowances Worksheet on page 1 of the form. Also, use the worksheets on page 2 of the form to adjust the number of your withholding allowances for itemized deductions and adjustments to income, and for two-earner or multiple-job situations. If you want to adjust the number of your withholding allowances for certain tax credits, use the Deductions and Adjustments Worksheet on page 2 of Form W-4, even if you do not have any deductions or adjustments.
Complete all worksheets that apply to your situation. The worksheets will help you figure the maximum number of withholding allowances you are entitled to claim so that the amount of income tax withheld from your wages will match, as closely as possible, the amount of income tax you will owe at the end of the year.
taxmap/pubs/p505-001.htm#en_us_publink10007202

Multiple jobs.(p5)
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If you have income from more than one job at the same time, complete only one set of Form W-4 worksheets. Then split your allowances between the Forms W-4 for each job. You cannot claim the same allowances with more than one employer at the same time. You can claim all your allowances with one employer and none with the other(s), or divide them any other way.
taxmap/pubs/p505-001.htm#en_us_publink10007203

Married individuals.(p5)
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If both you and your spouse are employed and expect to file a joint return, figure your withholding allowances using your combined income, adjustments, deductions, exemptions, and credits. Use only one set of worksheets. You can divide your total allowances any way, but you cannot claim an allowance that your spouse also claims.
If you and your spouse expect to file separate returns, figure your allowances using separate worksheets based on your own individual income, adjustments, deductions, exemptions, and credits.
taxmap/pubs/p505-001.htm#en_us_publink10007204

Alternative method of figuring withholding allowances.(p5)


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You do not have to use the Form W-4 worksheets if you use a more accurate method of figuring the number of withholding allowances.
The method you use must be based on withholding schedules, the tax rate schedules, and the 2009 Estimated Tax Worksheet in chapter 2. It must take into account only the items of income, adjustments to income, deductions, and tax credits that are taken into account on Form W-4.
You can use the number of withholding allowances determined under an alternative method rather than the number determined using the Form W-4 worksheets. You still must give your employer a Form W-4 claiming your withholding allowances.
taxmap/pubs/p505-001.htm#en_us_publink10007205

Employees who are not citizens or residents.(p6)


rule
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If you are neither a citizen nor a resident of the United States, you usually can claim only one withholding allowance. However, this rule does not apply if you are a resident of Canada or Mexico, or if you are a U.S. national. It also does not apply if your spouse is a U.S. citizen or resident and you have chosen to be treated as a resident of the United States. Special rules apply to residents of Korea and India. For more information, see Withholding From Compensation in chapter 8 of Publication 519.
taxmap/pubs/p505-001.htm#en_us_publink10007206

Personal Allowances Worksheet(p6)


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previous topic occurrence Personal Allowances Worksheet next topic occurrence

Use the Personal Allowances Worksheet on page 1 of Form W-4 to figure your withholding allowances based on all of the following that apply.
taxmap/pubs/p505-001.htm#en_us_publink10007207

Exemptions (worksheet lines A, C, and D).(p6)


rule
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You can claim one withholding allowance for each exemption you expect to claim on your tax return.
taxmap/pubs/p505-001.htm#en_us_publink10007208

Self.(p6)
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You can claim an allowance for your exemption on line A unless another person can claim an exemption for you on his or her tax return. If another person is entitled to claim an exemption for you, you cannot claim an allowance for your exemption even if the other person will not claim your exemption or the exemption will be reduced.
taxmap/pubs/p505-001.htm#en_us_publink10007209

Spouse.(p6)
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You can claim an allowance for your spouse's exemption on line C unless your spouse is claiming his or her own exemption or another person can claim an exemption for your spouse. Do not claim this allowance if you and your spouse expect to file separate returns.
taxmap/pubs/p505-001.htm#en_us_publink10007210

Dependents.(p6)
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You can claim one allowance on line D for each exemption you will claim for a dependent on your tax return.
Pencil
Reduction of personal allowances. For 2009, your deduction for personal exemptions on your tax return is reduced if your adjusted gross income (AGI) is more than the AGI shown below for your filing status.
Single$166,800
Married filing jointly or qualifying widow(er)$250,200
Married filing separately$125,100
Head of household$208,500
If you expect your AGI to be more than that amount, use Worksheet 1-1 below to figure your reduced number of personal allowances on lines A, C, and D of the Personal Allowances Worksheet. taxmap/pubs/p505-001.htm#w15008e21

Worksheet 1-1. Personal Allowances Worksheet (Form W-4)
Reduction of Personal Allowances if AGI Above Phaseout Threshold

      
1.Enter the total number of allowances on lines A, C, and D of the Personal Allowances Worksheet without regard to the phaseout rule 1.            
      
2.Enter your expected AGI2.              
3.Enter:    
  $166,800 if single    
  $250,200 if married filing jointly or qualifying widow(er)    
  $125,100 if married filing separately    
  $208,500 if head of household 3.              
4.Subtract line 3 from line 24.              
5.Divide line 4 by $125,000 ($62,500 if married filing separately). Enter the result as a decimal5..          
6.Multiply line 1 by line 5. If the result is not a whole number, increase it to the next higher whole number6.            
7.Divide line 6 by 3.07.            
8.Subtract line 7 from line 1. The total of the numbers you enter on lines A, C, and D of the Personal Allowances Worksheet cannot be more than this amount 8.            
taxmap/pubs/p505-001.htm#en_us_publink10007212

Only one job (worksheet line B).(p6)


rule
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You can claim an additional withholding allowance if any of the following apply for 2009. If you qualify for this allowance, enter "1" on line B of the worksheet.
taxmap/pubs/p505-001.htm#en_us_publink10007213

Head of household filing status (worksheet line E).(p6)


rule
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Generally, you can file as head of household if you are unmarried and pay more than half the cost of keeping up a home that: For more information, see Publication 501.
If you expect to file as head of household on your 2009 tax return, enter "1" on line E of the worksheet.
taxmap/pubs/p505-001.htm#en_us_publink10007214

Child and dependent care credit (worksheet line F).(p6)


rule
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Enter "1" on line F if you expect to claim a credit for at least $1,800 of qualifying child or dependent care expenses on your 2009 return. Generally, qualifying expenses are those you pay for the care of your dependent who is your qualifying child under age 13 or for your spouse or dependent who is not able to care for himself or herself so that you can work or look for work. For more information, see Publication 503, Child and Dependent Care Expenses.
Instead of using line F, you can choose to take the credit into account on line 5 of the Deductions and Adjustments Worksheet, as explained under Tax credits on page 8.
taxmap/pubs/p505-001.htm#en_us_publink10007215

Child tax credit (worksheet line G).(p6)


rule
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If your total income will be less than $61,000 ($90,000 if married), enter "2" on line G for each eligible child. Subtract "1" from that amount if you have three or more eligible children.
If your total income will be between $61,000 and $84,000 ($90,000 and $119,000 if married), enter "1" on line G for each eligible child plus "1" additional if you have six or more eligible children.
An eligible child is any child: Also, if the parents of a child can claim the child as an eligible child, no one else can claim the child as an eligible child unless that person's AGI is higher than the highest AGI of any parent of the child.
For more information about the child tax credit, see the instructions in your Form 1040 or Form 1040A tax package.
Instead of using line G, you can choose to take the credit into account on line 5 of the Deductions and Adjustments Worksheet, as explained under Tax credits on page 8.
taxmap/pubs/p505-001.htm#en_us_publink10007216

Total personal allowances (worksheet line H).(p7)


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Add lines A through G and enter the total on line H. If you do not use either of the worksheets on the back of Form W-4, enter the number from line H on line 5 of Form W-4.
taxmap/pubs/p505-001.htm#en_us_publink10007217

Deductions and 
Adjustments Worksheet(p7)


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previous topic occurrence Deductions and Adjustments Worksheet next topic occurrence

Use the Deductions and Adjustments Worksheet on page 2 of Form W-4 in the following situations.
Use the amount of each item you reasonably can expect to show on your return. However, do not use more than:
  1. The amount shown for that item on your 2008 return (or your 2007 return if you have not yet filed your 2008 return), plus
  2. Any additional amount related to a transaction or occurrence (such as payments already made, the signing of an agreement, or the sale of property) that you can prove has happened or will happen during 2008 or 2009.
Do not include any amount shown on your last tax return that has been disallowed by the IRS.
taxmap/pubs/p505-001.htm#en_us_publink10007218

Example.(p7)

On June 30, 2008, you bought your first home. On your 2008 tax return, you claimed itemized deductions of $6,600, the total mortgage interest and real estate tax you paid during the 6 months you owned your home. Based on your mortgage payment schedule and your real estate tax assessment, you reasonably can expect to claim deductions of $13,200 for those items on your 2009 return. You can use $13,200 to figure the number of your withholding allowances for itemized deductions.
taxmap/pubs/p505-001.htm#en_us_publink10007219

Not itemizing deductions.(p7)


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If you expect to claim the standard deduction on your tax return, skip lines 1 and 2, and enter "0" on line 3 of the worksheet.
taxmap/pubs/p505-001.htm#en_us_publink10007220

Itemized deductions (worksheet line 1).(p7)


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Enter your estimated total itemized deductions on line 1 of the worksheet.
Listed below are some of the deductions you can take into account when figuring additional withholding allowances for 2009. You normally claim these deductions on Schedule A of Form 1040.
  1. Medical and dental expenses that are more than 7.5% of your 2009 AGI (defined under AGI on this page).
  2. State and local income or sales taxes and property taxes.
  3. Sales and excise taxes paid on the purchase of certain new cars, trucks, motorcycles, and motor homes.
  4. Deductible home mortgage interest.
  5. Investment interest up to net investment income.
  6. Charitable contributions.
  7. Casualty and theft losses that are more than $500 and 10% of your AGI. However, the 10%-of-AGI limitation does not apply to a casualty loss occuring in a federally declared disaster area. In addition, the $500 limit for each separate casualty and the 10%-of-AGI limitation do not apply to the following disasters.
    1. The storms and tornadoes in the Kansas disaster area that began May 4, 2007. See Publication 4492-A, Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tornadoes.
    2. The storms, tornadoes, or flooding in the Midwestern disaster area. See Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas.
  8. Fully deductible miscellaneous itemized deductions, including:
    1. Impairment-related work expenses of persons with disabilities,
    2. Federal estate tax on income in respect of a decedent,
    3. Repayment of more than $3,000 of income held under a claim of right that you included in income in an earlier year because at the time you thought you had an unrestricted right to it,
    4. Unrecovered investments in an annuity contract under which payments have ceased because of the annuitant's death,
    5. Gambling losses up to the amount of gambling winnings reported on your return, and
    6. Casualty and theft losses from income-producing property.
  9. Other miscellaneous itemized deductions that are more than 2% of your AGI, including:
    1. Unreimbursed employee business expenses, such as education expenses, work clothes and uniforms, union dues and fees, and the cost of work-related small tools and supplies,
    2. Safe deposit box rental,
    3. Tax counsel and assistance, and
    4. Certain fees paid to an IRA trustee or custodian.
taxmap/pubs/p505-001.htm#en_us_publink1000150470

Worksheet 1-2. Deductions and Adjustments Worksheet
(Form W-4)—Line 1
Phaseout of Itemized Deductions

       
1.Enter the estimated total of your itemized deductions1.            
2.Enter the amount included in line 1 for medical and dental expenses, investment interest, casualty or theft losses, and gambling losses. Also include in the total any amount included as a carryover of charitable contributions that you elected to treat as a qualified contribution for relief efforts in a Midwestern disaster area 2.            
3.Is the amount on line 2 less than the amount on line 1?  
 No. Stop here. Your deduction is not limited. Enter the amount from line 1 above on line 1 of the Deductions and Adjustments Worksheet.   
 Yes. Subtract line 2 from line 1 3.            
4.Multiply line 3 by 80% (.80)4.              
5.Enter your expected AGI5.              
6.Enter $166,800 ($83,400 if married filing separately)6.              
7.Is the amount on line 6 less than the amount on line 5?  
 No. Stop here. Your deduction is not limited. Enter the amount from line 1 above on line 1 of the Deductions and Adjustments Worksheet.     
 Yes. Subtract line 6 from line 5 7.              
8.Multiply line 7 by 3% (.03)8.              
9.Enter the smaller of line 4 or line 8 9.            
10.Divide line 9 by 1.510.            
11.Subtract line 10 from line 911.            
12.Subtract line 11 from line 1. Enter the result here and on line 1 of the Deductions and Adjustments Worksheet12.            


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AGI.(p7)
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For the purpose of estimating your itemized deductions, your AGI is your estimated total income for 2009 minus any estimated adjustments to income (discussed below) that you include on line 4 of the Deductions and Adjustments Worksheet.
Pencil
Phaseout of itemized deductions. For 2009, your total itemized deductions may be phased out (reduced) if your AGI is more than $166,800 ($83,400 if married filing separately). If you expect your AGI to be more than that amount, use Worksheet 1-2 on page 8 to figure the amount to enter on line 1 of the Deductions and Adjustments Worksheet.
taxmap/pubs/p505-001.htm#en_us_publink10007223

Adjustments to income (worksheet line 4).(p7)


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Enter your estimated total adjustments to income and any additions to your standard deduction on line 4 of the Deductions and Adjustments Worksheet.
You can take the following adjustments to income into account when figuring additional withholding allowances for 2009. These adjustments appear on page 1 of your Form 1040 or 1040A.
You also can take into account the following special additions to the standard deduction.
taxmap/pubs/p505-001.htm#en_us_publink10007224

Tax credits (worksheet line 5).(p8)


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Although you can take most tax credits into account when figuring withholding allowances, the Personal Allowances Worksheet uses only the child and dependent care credit (line F) and the child tax credit (line G). But you can take these credits and others into account by adding an extra amount on line 5 of the Deductions and Adjustments Worksheet.
If you take the child and dependent care credit into account on line 5, do not use line F. If you take the child tax credit into account on line 5, do not use line G.
In addition to the child and dependent care credit and the child tax credit, you can take into account the following credits.
taxmap/pubs/p505-001.htm#en_us_publink10007225

Figuring line 5 entry.(p8)
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To figure the amount to add on line 5 for tax credits, multiply your estimated total credits by the appropriate number from Table 1-1 on page 9.
taxmap/pubs/p505-001.htm#en_us_publink10007226

Example.(p8)

You are married and expect to file a joint return for 2009. Your combined estimated wages are $68,000. Your estimated tax credits include a child and dependent care credit of $960 and a mortgage interest credit of $1,700 (total credits = $2,660).
In Table 1-1a, the number corresponding to your combined estimated wages ($38,001 – $90,000) is 6.7. Multiply your total estimated tax credits of $2,660 by 6.7. Add the result, $17,822, to the amount you otherwise would show on line 5 of the Deductions and Adjustments Worksheet and enter the total on line 5. Because you choose to account for your child and dependent care credit this way, do not make an entry on line F of the Personal Allowances Worksheet.
taxmap/pubs/p505-001.htm#en_us_publink10007227

Nonwage income (worksheet line 6).(p8)


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Enter on line 6 your estimated total nonwage income (other than tax-exempt income). Nonwage income includes interest, dividends, net rental income, unemployment compensation, alimony, gambling winnings, prizes and awards, hobby income, capital gains, royalties, and partnership income.
If line 6 is more than line 5, you may not have enough income tax withheld from your wages. See Getting the Right Amount of Tax Withheld on page 9.
taxmap/pubs/p505-001.htm#en_us_publink10007228

Net deductions and adjustments (worksheet line 8).(p8)


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If line 7 is less than $3,500, enter "0" on line 8. If line 7 is $3,500 or more, divide it by $3,500, drop any fraction, and enter the result on line 8.
taxmap/pubs/p505-001.htm#en_us_publink10007229

Example.(p8)

If line 7 is $5,200, $5,200 ÷ $3,500 = 1.49. Drop the fraction (.49) and enter "1" on line 8.
EIC
If you use Worksheet 1-2 and your earnings are more than $130,000 ($180,000 if you are married), see Publication 919 to check that you are having enough tax withheld.
taxmap/pubs/p505-001.htm#en_us_publink1000151778

Table 1-1. Deductions and Adjustments Worksheet (Form W-4)
—Line 5

a. Married Filing Jointly or
  Qualifying Widow(er)
If combined income from all sources is: Multiply credits by:
$0 – 38,00010.0
$38,001 – 90,0006.7
$90,001 – 160,0004.0
$160,001 – 250,0003.6
$250,001 – 410,0003.0
$410,001 and over2.8
b. Single
If combined income from all sources is: Multiply credits by:
$0 – 18,00010.0
$18,001 – 43,0006.7
$43,001 – 95,0004.0
$95,001 – 190,0003.6
$190,001 – 410,0003.0
$410,001 and over2.8
c. Head of Household
If combined income from all sources is: Multiply credits by:
$0 – 27,00010.0
$27,001 – 61,0006.7
$61,001 – 135,0004.0
$135,001 – 220,0003.6
$220,001 – 410,0003.0
$410,001 and over2.8
d. Married Filing Separately
If combined income from all sources is: Multiply credits by:
$0 – 19,00010.0
$19,001 – 45,0006.7
$45,001 – 80,0004.0
$80,001 – 125,0003.6
$125,001 – 205,0003.0
$205,001 and over2.8
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Two-Earners/Multiple Jobs Worksheet(p9)


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previous topic occurrence Two-Earners/Multiple Jobs Worksheet next topic occurrence

Complete the Two-Earners/Multiple Jobs Worksheet on page 2 of Form W-4 if you have more than one job or are married and you and your spouse both work and the combined earnings from all jobs are more than $40,000 ($25,000 if married).
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Reducing your allowances (worksheet lines 1–3).(p9)


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On line 1 of the worksheet, enter the number from line H of the Personal Allowances Worksheet (or line 10 of the Deductions and Adjustments Worksheet, if used). Using Table 1 in the Two-Earners/Multiple Jobs Worksheet, find the number listed beside the amount of your estimated wages for the year from your lowest paying job (or if lower and you are filing jointly, your spouse's job). Enter that number on line 2. However, if you are married filing jointly and estimated wages from the highest paying job are $50,000 or less, do not enter more than "3."
Subtract line 2 from line 1 and enter the result (but not less than zero) on line 3 and on Form W-4, line 5. If line 1 is more than or equal to line 2, do not use the rest of the worksheet.
If line 1 is less than line 2, enter "0" on Form W-4, line 5. Then complete lines 4 through 9 of the worksheet to figure the additional withholding needed to avoid underwithholding.
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Other amounts owed.(p9)


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If you expect to owe amounts other than income tax, such as self-employment tax, include them on line 8. The total is the additional withholding needed for the year.
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Illustrated Example—Form W-4(p9)


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Illustrated Example-Form W-4

Joyce Green works in a bookstore and expects to earn about $13,300. Her husband, John, works full time at the Acme Corporation, where his expected pay is $48,500. They file a joint income tax return and claim exemptions for their two children. Because they file jointly, they use only one set of Form W-4 worksheets to figure the number of withholding allowances. The Greens' worksheets and John's Form W-4 are shown in Figure 1-A, beginning on page 10.
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Personal Allowances Worksheet.(p9)


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On this worksheet, John and Joyce claim allowances for themselves and their children by entering "1" on line A, "1" on line C, and "2" on line D. Because both John and Joyce will receive wages of more than $1,500, they are not entitled to the additional withholding allowance on line B. The Greens expect to have child and dependent care expenses of $2,400. They enter "1" on line F of the worksheet. Because they are married, their total income will be less than $90,000, and they have two eligible children, they enter "4" on line G.
They enter their total personal allowances, "9," on line H.
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Deductions and Adjustments Worksheet.(p9)


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Because they plan to itemize deductions and claim adjustments to income, the Greens use this worksheet to see whether they are entitled to additional allowances.
The Greens' estimated itemized deductions total $11,800, which they enter on line 1 of the worksheet. Because they will file a joint return, they enter $11,400 on line 2. They subtract $11,400 from $11,800 and enter the result, $400, on line 3.
The Greens expect to have an adjustment to income of $4,000 for their deductible IRA contributions. They do not expect to have any other adjustments to income. They enter $4,000 on line 4.
They add line 3 and line 4 and enter the total, $4,400, on line 5.
Joyce and John expect to receive $600 in interest and dividend income during the year. They enter $600 on line 6 and subtract line 6 from line 5. They enter the result, $3,800, on line 7. They divide line 7 by $3,500, and drop the fraction to determine one additional allowance. They enter "1" on line 8.
The Greens enter "9" (the number from line H of the Personal Allowances Worksheet) on line 9 and add it to line 8. They enter "10" on line 10.
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Two-Earners/Multiple Jobs Worksheet.(p9)


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The Greens use this worksheet because they both work and together earn over $25,000. They enter "10" (the number from line 10 of the Deductions and Adjustments Worksheet) on line 1.
Next, they use Table 1 of the worksheet to find the number to enter on line 2. Because they will file a joint return and their expected wages from their lowest paying job are $13,300, they enter "2" on line 2. They subtract line 2 from line 1 and enter "8" on line 3 of the worksheet and on Form W-4, line 5.
John and Joyce Green can take a total of 8 withholding allowances between them. They decide that John will take all 8 allowances on his Form W-4. Joyce, therefore, cannot claim any allowances on hers. She will enter "0" on line 5 of the Form W-4 she gives to her employer.
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taxmap/pubs/p505-001.htm#TXMP33acf980
Figure 1-A. Illustrated Example--Form W-4 (John and Joyce Green) Text DescriptionFigure 1-A. Illustrated Example--Form W-4 (John and Joyce Green)  
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Figure 1-A. Illustrated Example--Form W-4 (Continued) Text DescriptionFigure 1-A. Illustrated Example--Form W-4 (Continued)  
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Getting the Right Amount  
of Tax Withheld(p9)


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previous topic occurrence Withholding Tax next topic occurrence

In most situations, the tax withheld from your pay will be close to the tax you figure on your return if you follow these two rules.
  • You accurately complete all the Form W-4 worksheets that apply to you.
  • You give your employer a new Form W-4 when changes occur.
But because the worksheets and withholding methods do not account for all possible situations, you may not be getting the right amount withheld. This is most likely to happen in the following situations.
  • You are married and both you and your spouse work.
  • You have more than one job at a time.
  • You have nonwage income, such as interest, dividends, alimony, unemployment compensation, or self-employment income.
  • You will owe additional amounts with your return, such as self-employment tax.
  • Your withholding is based on obsolete Form W-4 information for a substantial part of the year.
  • Your earnings are more than $130,000 if you are single or $180,000 if you are married.
  • You work only part of the year.
  • You change the number of your withholding allowances during the year.
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Part-Year Method(p12)


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Part-Year Method

If you work only part of the year and your employer agrees to use the part-year withholding method, less tax will be withheld from each wage payment than would be withheld if you worked all year. To be eligible for the part-year method, you must meet both of the following requirements.
  • You must use the calendar year (the 12 months from January 1 through December 31) as your tax year. You cannot use a fiscal year.
  • You must not expect to be employed for more than 245 days during the year. To figure this limit, count all calendar days that you are employed (including weekends, vacations, and sick days) beginning with the first day you are on the job for pay and ending with your last day of work. If you are temporarily laid off for 30 days or less, count those days too. If you are laid off for more than 30 days, do not count those days. You will not meet this requirement if you begin working before May 1 and expect to work for the rest of the year.
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How to apply for the part-year method.(p12)


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You must ask in writing that your employer use this method. The request must state all three of the following.
  • The date of your last day of work for any prior employer during the current calendar year.
  • That you do not expect to be employed more than 245 days during the current calendar year.
  • That you use the calendar year as your tax year.
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Cumulative Wage Method(p12)


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previous topic occurrence Cumulative Wage Method next topic occurrence

If you change the number of your withholding allowances during the year, too much or too little tax may have been withheld for the period before you made the change. You may be able to compensate for this if your employer agrees to use the cumulative wage withholding method for the rest of the year. You must ask your employer in writing to use this method.
To be eligible, you must have been paid for the same kind of payroll period (weekly, biweekly, etc.) since the beginning of the year.
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Publication 919(p12)


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previous topic occurrence How Do I Adjust My Tax Withholding? next topic occurrence

To make sure you are getting the right amount of tax withheld, get Publication 919. It will help you compare the total tax to be withheld during the year with the tax you can expect to figure on your return. It also will help you determine how much, if any, additional withholding is needed each payday to avoid owing tax when you file your return. If you do not have enough tax withheld, you may have to pay estimated tax. See chapter 2 for information about estimated tax.
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Rules Your Employer 
Must Follow(p13)


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previous topic occurrence Rules Your Employer Must Follow next topic occurrence

It may be helpful for you to know some of the withholding rules your employer must follow. These rules can affect how to fill out your Form W-4 and how to handle problems that may arise.
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New Form W-4.(p13)


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When you start a new job, your employer should give you a Form W-4 to fill out. Beginning with your first payday, your employer will use the information you give on the form to figure your withholding.
If you later fill out a new Form W-4, your employer can put it into effect as soon as possible. The deadline for putting it into effect is the start of the first payroll period ending 30 or more days after you turn it in.
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No Form W-4.(p13)


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If you do not give your employer a completed Form W-4, your employer must withhold at the highest rate, as if you were single and claimed no withholding allowances.
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Repaying withheld tax.(p13)


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If you find you are having too much tax withheld because you did not claim all the withholding allowances you are entitled to, you should give your employer a new Form W-4. Your employer cannot repay any of the tax previously withheld. Instead, claim the full amount withheld when you file your tax return.
However, if your employer has withheld more than the correct amount of tax for the Form W-4 you have in effect, you do not have to fill out a new Form W-4 to have your withholding lowered to the correct amount. Your employer can repay the amount that was withheld incorrectly. If you are not repaid, your Form W-2, Wage and Tax Statement, will reflect the full amount actually withheld, which you would claim when you file your tax return.
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IRS review of your withholding.(p13)


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Whether you are entitled to claim a certain number of allowances or a complete exemption from withholding is subject to review by the IRS. Your employer may be required to send a copy of the Form W-4 to the IRS. There is a penalty for supplying false information on Form W-4. See Penalties on page 14.
If the IRS determines that you cannot claim more than a specified number of withholding allowances or claim a complete exemption from withholding, the IRS will issue a notice of the maximum number of withholding allowances permitted (commonly referred to as a "lock-in letter") to both you and your employer.
The IRS will provide a period of time during which you can dispute the determination before your employer adjusts your withholding. If you believe that you are entitled to claim complete exemption from withholding or claim more withholding allowances than the maximum number specified by the IRS in the lock-in letter, you must submit a new Form W-4 and a written statement to support your claims to the IRS. Contact information (a toll-free number and an IRS office address) will be provided in the lock-in letter. At the end of this period, if you have not responded or if your response is not adequate, your employer will be required to withhold based on the original lock-in letter.
After the lock-in letter takes effect, your employer must withhold tax on the basis of the withholding rate (marital status) and maximum number of withholding allowances specified in that letter.
If you later believe that you are entitled to claim exemption from withholding or more allowances than the IRS determined, you can complete a new Form W-4 and a written statement to support the claims made on the Form W-4 and send them directly to the IRS address shown on the lock-in letter. Your employer must continue to figure your withholding on the basis of the number of allowances previously determined by the IRS until the IRS advises your employer otherwise.
At any time, either before or after the lock-in letter becomes effective, you may give your employer a new Form W-4 that does not claim complete exemption from withholding and results in more income tax withheld than specified in the lock-in letter. Your employer must then withhold tax based on this new Form W-4.
Additional information is available on the IRS website at www.irs.gov. Enter "withholding compliance questions" in the search box.
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Exemption From Withholding(p13)


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previous topic occurrence Exemption From Withholding next topic occurrence

If you claim exemption from withholding, your employer will not withhold federal income tax from your wages. The exemption applies only to income tax, not to social security or Medicare tax.
You can claim exemption from withholding for 2009 only if both of the following situations apply.
  • For 2008 you had a right to a refund of all federal income tax withheld because you had no tax liability.
  • For 2009 you expect a refund of all federal income tax withheld because you expect to have no tax liability.
Use Figure 1-B on page 12 to help you decide whether you can claim exemption from withholding. Do not use Figure 1-B if you:
  • Are 65 or older,
  • Are blind,
  • Will itemize deductions on your 2009 return,
  • Will claim an exemption for a dependent on your 2009 return, or
  • Will claim any tax credits on your 2009 return.
These situations are discussed later.
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Students.(p13)


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If you are a student, you are not automatically exempt. If you work only part time or during the summer, you may qualify for exemption from withholding.
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Example 1.(p13)

You are a high school student and expect to earn $2,500 from a summer job. You do not expect to have any other income during the year, and your parents will be able to claim an exemption for you on their tax return. You worked last summer and had $375 federal income tax withheld from your pay. The entire $375 was refunded when you filed your 2008 return. Using Figure 1-B, you find that you can claim exemption from withholding.
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Figure 1-B: Exemption From Withholding on Form W-4  Text DescriptionFigure 1-B: Exemption From Withholding on Form W-4   
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Example 2.(p13)

The facts are the same as in Example 1, except that you also have a savings account and expect to have $350 interest income during the year. Using Figure 1-B, you find that you cannot claim exemption from withholding because your unearned income will be more than $300 and your total income will be more than $950.
EIC
You may have to file a tax return, even if you are exempt from withholding. See Publication 501 to see whether you must file a return.
Pencil
Age 65 or older or blind. If you are 65 or older or blind, use Worksheet 1-3 or Worksheet 1-4 on page 14 to help you decide whether you can claim exemption from withholding. Do not use either worksheet if you will itemize deductions, claim exemptions for dependents, or claim tax credits on your 2009 return. Instead, see Itemizing deductions or claiming exemptions or credits next.
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Worksheet 1-3.Exemption From Withholding for Persons Age 65 or Older or Blind
Use this worksheet only if, for 2008 you had a right to a refund of all federal income tax withheld because you had no tax liability.
Caution. This worksheet does not apply if you can be claimed as a dependent. See Worksheet 1-4 instead.
1.Check the boxes below that apply to you.
  65 or older  □ Blind  □
2.Check the boxes below that apply to your spouse if you will claim your spouse's exemption on your 2009 return.
  65 or older  □ Blind  □
3.Add the number of boxes you checked in
1 and 2 above. Enter the result
            
You can claim exemption from withholding if:
Your filing status is:and the number on
line 3 above is:
and your
2009 total
income will be
no more than:
Single1$10,750
 212,150
Head of1$13,400
household214,800
Married filing1$10,450
separately for211,550
both 2008 and312,650
2009413,750
Other married1$19,800*
status220,900*
 322,000*
 423,100*
* Include both spouses' income whether you will file separately or jointly.
Qualifying1$16,150
widow(er)217,250
You cannot claim exemption from withholding if your total income will be more than the amount shown for your filing status.


  
Worksheet 1-4.Exemption From Withholding for Dependents Age 65 or Older or Blind
Use this worksheet only if, for 2009, you are a dependent and if, for 2008, you had a right to a refund of all federal income tax withheld because you had no tax liability.
1.Enter your expected earned income plus $3001.            
2.Minimum amount2.$  950
3.Compare lines 1 and 2. Enter the larger amount 3.            
4.Limit4.5,700
5.Compare lines 3 and 4. Enter the smaller amount 5.            
6.Enter the appropriate amount from the following table6.            
 Single   
  Either 65 or older or blind$1,400  
  Both 65 or older and blind2,800  
 Married filing separately   
  Either 65 or older or blind1,100  
  Both 65 or older and blind 2,200  
7.Add lines 5 and 6. Enter the result7.            
8.Enter your total expected income8.            
You can claim exemption from withholding if line 7 is equal to or more than line 8. You cannot claim exemption from withholding if line 8 is more than line 7.


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Itemizing deductions or claiming exemptions or credits.(p13)


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If you had no tax liability for 2008, and you will:
  • Itemize deductions,
  • Claim an exemption for a dependent, or
  • Claim a tax credit,
use the 2009 Estimated Tax Worksheet in Form 1040-ES (also see chapter 2), to figure your 2009 expected tax liability. You can claim exemption from withholding only if your total expected tax liability (line 13c of the worksheet) is zero.
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Claiming exemption from withholding.(p13)


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To claim exemption, you must give your employer a Form W-4. Do not complete lines 5 and 6. Enter "Exempt" on line 7.
If you claim exemption, but later your situation changes so that you will have to pay income tax after all, you must file a new Form W-4 within 10 days after the change. If you claim exemption in 2009 but you expect to owe income tax for 2010, you must file a new Form W-4 by December 1, 2009.
Your claim of exempt status may be reviewed by the IRS. See IRS review of your withholding on this page.
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An exemption is good for only one year.(p13)
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You must give your employer a new Form W-4 by February 15 each year to continue your exemption.
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Supplemental Wages(p13)


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Supplemental wages include bonuses, commissions, overtime pay, vacation allowances, certain sick pay, and expense allowances under certain plans. The payer can figure withholding on supplemental wages using the same method used for your regular wages. However, if these payments are identified separately from regular wages, your employer or other payer of supplemental wages can withhold income tax from these wages at a flat rate.
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Expense allowances.(p14)


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Reimbursements or other expense allowances paid by your employer under a nonaccountable plan are treated as supplemental wages. A nonaccountable plan is a reimbursement arrangement that does not require you to account for, or prove, your business expenses to your employer or does not require you to return your employer's payments that are more than your proven expenses.
Reimbursements or other expense allowances paid under an accountable plan that are more than your proven expenses are treated as paid under a nonaccountable plan if you do not return the excess payments within a reasonable period of time.
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Accountable plan.(p14)


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To be an accountable plan, your employer's reimbursement or allowance arrangement must include all three of the following rules.
  • Your expenses must have a business connection. That is, you must have paid or incurred deductible expenses while performing services as an employee of your employer.
  • You must adequately account to your employer for these expenses within a reasonable period of time.
  • You must return any excess reimbursement or allowance within a reasonable period of time.
An excess reimbursement or allowance is any amount you are paid that is more than the business-related expenses that you adequately accounted for to your employer.
The definition of reasonable period of time depends on the facts and circumstances of your situation. However, regardless of those facts and circumstances, actions that take place within the times specified in the following list will be treated as taking place within a reasonable period of time.
  • You receive an advance within 30 days of the time you have an expense.
  • You adequately account for your expenses within 60 days after they were paid or incurred.
  • You return any excess reimbursement within 120 days after the expense was paid or incurred.
  • You are given a periodic statement (at least quarterly) that asks you to either return or adequately account for outstanding advances and you comply within 120 days of the statement.
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Nonaccountable plan.(p14)


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Any plan that does not meet the definition of an accountable plan is considered a nonaccountable plan.
For more information about accountable and nonaccountable plans, see chapter 6 of Publication 463, Travel, Entertainment, Gift, and Car Expenses.
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Penalties(p14)


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previous topic occurrence Penalty next topic occurrence

You may have to pay a penalty of $500 if both of the following apply.
  • You make statements or claim withholding allowances on your Form W-4 that reduce the amount of tax withheld.
  • You have no reasonable basis for those statements or allowances at the time you prepare your Form W-4.
There is also a criminal penalty for willfully supplying false or fraudulent information on your Form W-4 or for willfully failing to supply information that would increase the amount withheld. The penalty upon conviction can be either a fine of up to $1,000 or imprisonment for up to 1 year, or both.
These penalties will apply if you deliberately and knowingly falsify your Form W-4 in an attempt to reduce or eliminate the proper withholding of taxes. A simple error or an honest mistake will not result in one of these penalties. For example, a person who has tried to figure the number of withholding allowances correctly, but claims seven when the proper number is six, will not be charged a Form W-4 penalty. However, see chapter 4 for information on the penalty for underpaying your tax.
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