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IRS.gov Website
Publication 505
taxmap/pubs/p505-009.htm#en_us_publink1000194523

Backup Withholding(p15)

rule
Banks or other businesses that pay you certain kinds of income must file an information return (Form 1099) with the IRS. The information return shows how much you were paid during the year. It also includes your name and taxpayer identification number (TIN). TINs are explained later in this discussion.
These payments generally are not subject to withholding. However, "backup" withholding is required in certain situations.
taxmap/pubs/p505-009.htm#en_us_publink1000194524

Payments subject to backup withholding.(p15)

rule
Backup withholding can apply to most kinds of payments that are reported on Form 1099. These include: Backup withholding also may apply to gambling winnings. See Backup withholding on gambling winnings under Gambling Winnings.
taxmap/pubs/p505-009.htm#en_us_publink1000194526

Payments not subject to backup withholding.(p15)

rule
Backup withholding does not apply to payments reported on Form 1099-MISC (other than payments by fishing boat operators and royalty payments) unless at least one of the following three situations applies.
Form 1099 and backup withholding are generally not required for a payment of less than $10.
taxmap/pubs/p505-009.htm#en_us_publink1000194527

Withholding rules.(p15)

rule
When you open a new account, make an investment, or begin to receive payments reported on Form 1099, the bank or other business will give you Form W-9, Request for Taxpayer Identification Number and Certification, or a similar form. You must enter your TIN on the form and, if your account or investment will earn interest or dividends, you also must certify (under penalties of perjury) that your TIN is correct and that you are not subject to backup withholding.
The payer must withhold at a flat 28% rate in the following situations.
taxmap/pubs/p505-009.htm#en_us_publink1000194528
Taxpayer identification number.(p15)
Your TIN is one of the following three numbers.
An ITIN is for tax use only. It does not entitle you to social security benefits or change your employment or immigration status under U.S. law. For more information on ITINs, get Publication 1915, Understanding Your IRS Individual Taxpayer Identification Number.
taxmap/pubs/p505-009.htm#en_us_publink1000194529

How to prevent or stop backup withholding.(p15)

rule
If you have been notified by a payer that the TIN you gave is incorrect, you usually can prevent backup withholding from starting or stop backup withholding once it has begun by giving the payer your correct name and TIN. You must certify that the TIN you give is correct.
However, the payer will provide additional instructions if the TIN you gave needs to be validated by the Social Security Administration or by the IRS. This may happen if both the following conditions exist.
  1. The IRS notifies the payer twice within 3 calendar years that a TIN you gave for the same account is incorrect.
  2. The incorrect TIN is still being used on the account when the payer receives the second notice.
taxmap/pubs/p505-009.htm#en_us_publink1000194530
Underreported interest or dividends.(p15)
If you have been notified that you underreported interest or dividends, you must request and receive a determination from the IRS to prevent backup withholding from starting or to stop backup withholding once it has begun. Your request must show that at least one of the following situations applies.
If the IRS determines that backup withholding should stop, it will provide you with certification and will notify the payers who were sent notices earlier.
taxmap/pubs/p505-009.htm#en_us_publink1000194531

Penalties.(p16)

rule
There are civil and criminal penalties for giving false information to avoid backup withholding. The civil penalty is $500. The criminal penalty, upon conviction, is a fine of up to $1,000 or imprisonment of up to 1 year, or both.
taxmap/pubs/p505-009.htm#en_us_publink1000194532

(p16)

rule

Worksheets for Chapter 1

Use the following worksheets to figure your correct withholding and adjustments.
Use ... To ...
Worksheet 1-1
Personal Allowances Worksheet (Form W-4) Reduction of Personal Allowances if AGI is above Phaseout Threshold
Figure your personal allowances if your adjusted gross income is over the stated threshold.
Worksheet 1-2
Deductions and Adjustments Worksheet
(Forms W-4) —Line 1
Phaseout of Itemized Deductions
Figure your itemized deductions if your adjusted gross income is over the stated threshold.
Worksheet 1-3 and
Worksheet 1-4
Exemption From Withholding for Persons/Dependents Age 65 or Older or Blind
Figure your total expected income for 2014 to determine if you are exempt from withholding. Use Worksheet 1-3, if in 2013, you had a right to a refund of all federal income tax withheld because of no tax liability. Use Worksheet 1-4, if you are a dependent for 2014, and for 2013, you had a refund of all federal income tax withheld because of no tax liability.
Worksheet 1-5
Projected Tax for 2014
Project the taxable income you will have for 2014 and figure the amount of tax you will have to pay on that income.
Worksheet 1-6
Tax Computation Worksheets for 2014
Figure the amount of tax on your projected taxable income.
Worksheet 1-7
Projected Withholding for 2014
Project the amount of federal income tax that you will have withheld in 2014, compare your projected withholding with your projected tax, and determine whether the amount withheld each payday should be adjusted.
Worksheet 1-8
Converting Credits to Withholding Allowances for 2014 Form W-4
Figure the adjustment to make to line 5 of the Form W-4 Deductions and Adjustments Worksheet to account for your projected tax credits that are not otherwise taken into consideration.
taxmap/pubs/p505-009.htm#en_us_publink1000194542

Worksheet 1-3.Exemption From Withholding for Persons Age 65 or Older or Blind

Use this worksheet only if, for 2013 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 2014 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 2014 total income will be no more than:
Single 1 $11,700
  2 13,250
Head of 1 $14,600
household 2 16,150
Married filing 1 $11,350
separately for 2 12,550
both 2013 and 3 13,750
2014 4 14,950
Other married 1 $21,500*
status 2 22,700*
  3 23,900*
  4 25,100*
* Include both spouses' income whether you will file separately or jointly.
Qualifying 1 $17,550
widow(er) 2 18,750
You cannot claim exemption from withholding if your total income will be more than the amount shown for your filing status.
taxmap/pubs/p505-009.htm#en_us_publink1000194543

Worksheet 1-4.Exemption From Withholding for Dependents Age 65 or Older or Blind

Use this worksheet only if, for 2014, you are a dependent and if, for 2013, 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 $3501.
2.Minimum amount2.$ 1,000
3.Compare lines 1 and 2. Enter the larger amount 3.
4.Limit4.6,200
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$1,550   
  Both 65 or older and blind3,100   
 Married filing separately    
  Either 65 or older or blind1,200   
  Both 65 or older and blind 2,400   
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.
taxmap/pubs/p505-009.htm#en_us_publink1000194544
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Worksheet 1-5. Projected Tax for 2014

Use this worksheet to figure your projected tax for 2014. Note. Enter combined amounts if married filing jointly.
1.Enter amount of adjusted gross income (AGI) you expect in 2014. (To determine this, you may want to start with the AGI on your last year's return, and add or subtract your expected changes. Also take into account items listed under What's New, earlier.)   
 Note. If self-employed, first complete Worksheet 2-3 to figure your expected deduction for self-employment tax. Subtract the amount from Worksheet 2-3, line 11, to figure the line 1 entry 1 
2.If you:   
 Do not plan to itemize deductions on Schedule A (Form 1040), use Worksheet 2-4 to figure your expected standard deduction and enter that amount here.   
 Plan to itemize deductions, and the amount on line 1 is:
  • Not more than $305,050 if married filing jointly or qualifying widow(er), $279,650 if head of household, $254,200 if single, or $152,525 if married filing separately, enter the total itemized deductions you expect after applying any limits, such as the 10% limit on medical expenses (7.5% if either you or your spouse was born before January 2, 1950).
  • More than the above limits use Worksheet 1-2 to figure the amount to enter here
2 
3.Subtract line 2 from line 1 (if zero or less, enter -0- and go to line 6)3 
4.If the amount on line 1 is:  
 Not more than the amount shown below for your 2014 filing status, multiply the number of exemptions you plan to claim on your 2014 tax return by $3,950 and enter the result here.   
 More than the amount shown below for your 2014 filing status, use Worksheet 2-6 to figure the amount to enter here.
  • Married filing jointly or Qualifying widow(er) — $305,050
  • Head of household — $279,650
  • Single — $254,200
  • Married filing separately — $152,525
4 
5.Expected taxable income. Subtract line 4 from line 3 (if zero or less, enter -0- here and on line 6,
then go to line 7)
5 
6.If the amount on line 1:   
 Does not include a net capital gain or qualified dividends and you did not exclude foreign earned income or exclude or deduct foreign housing in arriving at the amount on line 1, use the appropriate section of Worksheet 1-6 to figure the tax to enter here.   
 Includes a net capital gain or qualified dividends, use Worksheet 2-7 to figure the tax to enter here.  
 Was figured by excluding foreign earned income or excluding or deducting foreign housing, use
Worksheet 2-8 to figure the tax to enter here
6 
7.Enter any expected additional taxes from an election to report your child's interest and dividends (Form 8814), lump-sum distributions (Form 4972), recapture of education credits, and alternative minimum tax (Form 6251 or the Alternative Minimum Tax Worksheet in the Form 1040A instructions) 7 
8.Add lines 6 and 78 
9.Enter the amount of any expected tax credits. See Table 1-2.9 
10.Subtract line 9 from line 8 (if zero or less, enter -0-)10 
11.Self-employment tax. Enter the amount from Worksheet 2-3, line 10. (If you expect to file jointly and both of you are self-employed, figure the self-employment tax for each of you separately and enter the total on line 11.) 11 
12.Enter the total of any other expected taxes*12 
13.Projected tax for 2014. Add lines 10 through 12. Enter the total here and on Worksheet 1-7, line 1 13 
*Use the instructions for the 2013 Form 1040 to determine if you expect to owe, for 2014, any of the taxes that would have been entered on your 2013 Form 1040, lines 58 and 59 (boxes a or b), and any write-in amounts on line 60.
taxmap/pubs/p505-009.htm#en_us_publink1000194545
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Worksheet 1-6.Tax Computation Worksheets for 2014

Note. If you are figuring the tax on an amount from Worksheet 2-7 (line 1 or 14), or Worksheet 2-8 (line 2 or 3), enter the amount from that worksheet in column (a) of the row that applies to that amount of income. Enter the result on the appropriate line of the worksheet you are completing.

a. Single. Use this worksheet to figure the amount to enter on Worksheet 1-5, line 6, if you expect your filing status for 2014 to be Single.
Expected Taxable Income (a)
Enter amount from
Worksheet 1-5,
line 5*
(b)
Multiplication amount
(c)
Multiply
(a) by (b)
(d)
Subtraction amount
(e)
Subtract (d) from (c). Enter the result here and on Worksheet 1-5, line 6*
If Worksheet 1-5,
line 5* is —
Over But not
over
$0$9,075 × 10% (.10) $0 
9,07536,900 × 15% (.15) 453.75 
36,90089,350 × 25% (.25) 4,143.75 
89,350186,350 × 28% (.28) 6,824.25 
186,350405,100 × 33% (.33) 16,141.75 
405,100406,750 × 35% (.35) 24,243.75 
406,750- - - - -        × 39.6% (.396) 42,954.25 
* If you are using Worksheet 2-7, for column (a) above use the amount from line 1 or line 14 and enter the result (from column (e)) on line 37 or line 39, as appropriate.
 If you are using Worksheet 2-8, for column (a) above use the amount from line 2 or line 3 and enter the result (from column (e)) on line 4 or line 5, as appropriate.
b. Head of Household. Use this worksheet to figure the amount to enter on Worksheet 1-5, line 6, if you expect your filing status for 2014 to be Head of Household.
Expected Taxable Income (a)
Enter amount from
Worksheet 1-5,
line 5*
(b)
Multiplication amount
(c)
Multiply
(a) by (b)
(d)
Subtraction amount
(e)
Subtract (d) from (c). Enter the result here and on Worksheet 1-5, line 6*
If Worksheet 1-5,
line 5* is —
Over But not
over
$0$12,950 × 10% (.10) $0 
12,95049,400 × 15% (.15) 647.50 
49,400127,550 × 25% (.25) 5,587.50 
127,550206,600 × 28% (.28) 9,414.00 
206,600405,100 × 33% (.33) 19,744.00 
405,100432,200 × 35% (.35) 27,846.00 
432,200- - - - - × 39.6% (.396) 47,727.20 
* If you are using Worksheet 2-7, for column (a) above use the amount from line 1 or line 14 and enter the result (from column (e)) on line 37 or line 39, as appropriate.
 If you are using Worksheet 2-8, for column (a) above use the amount from line 2 or line 3 and enter the result (from column (e)) on line 4 or line 5, as appropriate.
taxmap/pubs/p505-009.htm#en_us_publink1000194546

c. Married Filing Jointly or Qualifying Widow(er). Use this worksheet to figure the amount to enter on Worksheet 1-5, line 6, if you expect your filing status for 2014 to be Married Filing Jointly or Qualifying Widow(er).
Expected Taxable Income (a)
Enter amount from
Worksheet 1-5,
line 5*
(b)
Multiplication amount
(c)
Multiply
(a) by (b)
(d)
Subtraction amount
(e)
Subtract (d) from (c). Enter the result here and on Worksheet 1-5, line 6*
If Worksheet 1-5,
line 5* is —
Over But not
over
$0$18,150 × 10% (.10) $0 
18,15073,800 × 15% (.15) 907.50 
73,800148,850 × 25% (.25) 8,287.50 
148,850226,850 × 28% (.28) 12,753.00 
226,850405,100 × 33% (.33) 24,095.50 
405,100457,600 × 35% (.35) 32,197.50 
457,600- - - - - × 39.6% (.396) 53,247.10 
* If you are using Worksheet 2-7, for column (a) above use the amount from line 1 or line 14 and enter the result (from column (e)) on line 37 or line 39, as appropriate.
 If you are using Worksheet 2-8, for column (a) above use the amount from line 2 or line 3 and enter the result (from column (e)) on line 4 or line 5, as appropriate.
d. Married Filing Separately. Use this worksheet to figure the amount to enter on Worksheet 1-5, line 6, if you expect your filing status for 2014 to be Married Filing Separately.
Expected Taxable Income (a)
Enter amount from
Worksheet 1-5,
line 5*
(b)
Multiplication amount
(c)
Multiply
(a) by (b)
(d)
Subtraction amount
(e)
Subtract (d) from (c). Enter the result here and on Worksheet 1-5, line 6*
If Worksheet 1-5,
line 5* is —
Over But not
over
$0$9,075 × 10% (.10) $0 
9,07536,900 × 15% (.15) 453.75 
36,90074,425 × 25% (.25) 4,143.75 
74,425113,425 × 28% (.28) 6,376.50 
113,425202,550 × 33% (.33) 12,047.75 
202,550228,800 × 35% (.35) 16,098.75 
228,800- - - - - × 39.6% (.396) 26,623.55 
* If you are using Worksheet 2-7, for column (a) above use the amount from line 1 or line 14 and enter the result (from column (e)) on line 37 or line 39, as appropriate.
 If you are using Worksheet 2-8, for column (a) above use the amount from line 2 or line 3 and enter the result (from column (e)) on line 4 or line 5, as appropriate
taxmap/pubs/p505-009.htm#en_us_publink1000194547
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Worksheet 1-7. Projected Withholding for 2014

Use this worksheet to figure the amount of your projected withholding for 2014, compare it to your projected tax for 2014, and, if necessary, figure an additional amount to have withheld each payday.

Note. If married filing jointly, enter combined amounts.
1.Enter your projected tax for 2014 from Worksheet 1-5, line 13 1
2.Enter your total federal income tax withheld to date in 2014 from all sources of income. (For wages, you should be able to find the withholding-to-date on your last pay slip or statement.) 2
3.Enter the federal tax withholding you expect for the rest of 2014:  
  a. For each source of wages, multiply the amount of federal income tax now being withheld each payday by the number of paydays remaining in the year and enter the combined amount for all jobs 3a
  b. For all other sources of recurring taxable income, multiply the withholding amount by the remaining number of times the income is expected. For example, if you have federal income tax withheld from your monthly pension and you will receive nine more payments this year, multiply your monthly withholding amount by 9 3b
4.Add lines 2, 3a, and 3b. This is your projected withholding for 20144
5.Compare the amounts on lines 1 and 4.  
  • If line 1 is more than line 4, subtract line 4 from line 1. Enter the result here and go to line 6.5
  • If line 4 is more than line 1, stop here and see How Do You Decrease Your Withholding?  
6.Divide line 5 by the number of paydays (or other withholding events) remaining in 2014 and enter the result. This is the additional amount you should have withheld from each remaining payment. Enter this amount on Form W-4, line 6 6
taxmap/pubs/p505-009.htm#en_us_publink1000194548
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Worksheet 1-8.Converting Credits to Withholding Allowances
for 2014 Form W-4

Use this worksheet to figure an additional amount to enter on the Form W-4 Deductions and Allowances Worksheet, line 5. For more information on these credits, see Converting Credits to Withholding Allowances, earlier.
Caution. If you enter an amount on line 1 below, enter -0- on line F of the Form W-4 Personal Allowances Worksheet. If you enter an amount on line 3 below, enter -0- on line G of the Form W-4 Personal Allowances Worksheet.
For lines 1 through 9, enter the projected amount for each credit you expect to take.   
1.Credit for child and dependent care expenses (see Caution above) 1 
2.Credit for the elderly or the disabled2 
3.Child tax credit (including additional child tax credit) (see Caution above) 3 
4.Education credits4 
5.Adoption credit5 
6.Foreign tax credit6 
7.Retirement savings contributions credit7 
8.Earned income credit8 
9.Other credits (see Table 1-2.) 9 
10.Add lines 1 through 9. This is your total estimated tax credits10 
11.Using the table below that matches your filing status, find the line in the table that matches your combined income from all sources. Then, enter on line 11 the multiplication factor shown next to your income.   
             
 Married Filing Jointly
or Qualifying Widow(er)
 Head of Household   
 If your combined income from all sources is:Multiply credits by: If your combined income from all sources is:Multiply credits by:   
 $0-$42,00010.0 $0-$30,00010.0   
 42,001-98,0006.7 30,001-66,0006.7   
 98,001-180,0004.0 66,001-150,0004.0   
 180,001-270,0003.6 150,001-235,0003.6   
 270,001-440,0003.0 235,001-430,0003.0   
 440,001-490,0002.9 430,001-460,0002.9   
 490,001and over   2.5 460,001and over  2.5   
             
 Single Married Filing Separately   
 If your combined income from all sources is:Multiply credits by: If your combined income from all sources is:Multiply credits by:   
 $0-$19,00010.0 $0-$21,00010.0   
 19,001-47,0006.7 21,001-49,0006.7   
 47,001-104,0004.0 49,001-90,0004.0   
 104,001-205,0003.6 90,001-135,0003.6   
 205,001-430,0003.0 135,001-220,0003.0   
 430,001and over   2.5 220,001-245,0002.9   
      245,001and over  2.5 11 
12.Multiply line 10 by line 11. Enter the result here and include it in the total on line 5 of the Form W-4 Deductions and Adjustments Worksheet 12