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previous page Previous Page: Publication 915 - Social Security and Equivalent Railroad Retirement Benefits - How To Get Tax Help
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Publication 919

How Do I Adjust My Tax Withholding?


What's New for 2009(p2)


You should consider the items in this section when figuring the amount of your tax withholding for 2009. Unless otherwise stated, see Publication 553, Highlights of 2008 Tax Changes, for more information.

Definition of a qualifying child revised.(p2)

The following changes to the definition of a qualifying child have been made.

Divorced or separated parents.(p2)

A noncustodial parent claiming an exemption for a child can no longer attach certain pages from a divorce decree or separation agreement executed after 2008. The noncustodial parent will have to attach Form 8332 or a similar statement signed by the custodial parent whose only purpose is to release a claim for exemption.

Differential wage payments subject to withholding.(p2)

Beginning in 2009, differential wage payments made to active members of the uniformed services are treated as wages and income tax must be withheld. For more details, see Publication 15, Employer's Tax Guide.

Certain unemployment compensation excluded from income.(p2)

You can exclude from income the first $2,400 of unemployment compensation you receive.

Economic recovery payment to recipients of social security, supplemental social security, railroad retirement benefits, and veterans disability compensation or pension benefits.(p2)

If you receive any of the above benefits, you will receive an economic recovery payment of $250. This is not included in your income.

Qualified small business stock.(p2)

The exclusion of gain from the sale of qualifying small business stock is increased to 75% for stock acquired after February 17, 2009, and before January 1, 2011.

Limit on exclusion of gain on sale of main home.(p2)

Generally, gain from the sale of your main home is no longer excludable from income if the gain is allocable to periods after 2008 when neither you nor your spouse (or your former spouse) used the property as a main home.

Retirement savings plans.(p2)

The following paragraphs highlight changes that affect individual retirement arrangements (IRAs) and pension plans. For more information, see Publication 590, Individual Retirement Arrangements (IRAs).
IRA deduction expanded. You may be able to take an IRA deduction if you were covered by a retirement plan at work and your 2009 modified adjusted gross income (AGI) is less than $65,000 ($109,000 if married filing jointly or a qualifying widow(er)). If your spouse was covered by a retirement plan but you were not, you may be able to take an IRA deduction if your modified AGI is less than $176,000.
Elective salary deferrals. The maximum amount you can defer under all plans generally is limited to $16,500 ($11,500 if you have only SIMPLE plans; $19,500 for section 403(b) plans if you qualify for the 15-year rule). The catch-up contribution limit for individuals age 50 or older at the end of the year is increased to $5,500 (except for section 401(k)(11) plans and SIMPLE plans, for which this limit remains unchanged).
Retirement savings contributions credit (saver's credit). For 2009, the income limits have increased and you may be able to claim this credit if your modified AGI is not more than $27,750 ($55,500 if married filing jointly, $41,625 if head of household).
Temporary waiver of certain required minimum distribution rules. No minimum distribution is required from your IRA or employer-provided qualified retirement plan for 2009. For more information, see Publication 575, Pension and Annuity Income, or Publication 590.

Increased standard deduction.(p2)

You may be able to increase your standard deduction by the following amounts.

Standard mileage rates.(p2)

The standard mileage rate for the cost of operating your car is:

Personal casualty and theft loss.(p2)

A personal casualty or theft loss must exceed $500 to be allowed. This is in addition to the 10% of AGI limit that generally applies to the net loss.

Alternative minimum tax (AMT) exemption amount increases.(p2)

The AMT exemption amount is increased to $46,700 ($70,950 if married filing jointly or a qualifying widow(er); $35,475 if married filing separately).

Tax on child's investment income.(p3)

Generally, Form 8615 will be required to figure the tax for children with investment income of more than $1,900.

Making work pay credit.(p3)

You can claim a refundable credit of up to $400 ($800 if married filing jointly) if you work. You can claim the credit if you are an employee or self-employed. The credit is 6.2% of your earned income, which includes nontaxable combat pay, up to the $400 (or $800) limit. The credit is phased out if your modified adjusted gross income (AGI) is more than $75,000 ($150,000 if married filing jointly). See Worksheet 12.

Hope education credit expanded.(p3)

For 2009 and 2010, the maximum credit is $2,500, it is available for the first 4 years of post-secondary education, and 40% of the credit is refundable. The increased benefits will be phased out if your modified AGI is above $80,000 ($160,000 if married filing jointly).

Qualified education expenses under a qualified tuition program (QTP).(p3)

During 2009 and 2010, qualified education expenses will include the purchase of computer technology, equipment, or Internet access and related services if it is to be used by the beneficiary and the beneficiary's family during any of the years the beneficiary is enrolled at an eligible educational institution. (This does not include expenses for computer software designed for sports, games, or hobbies unless the software is predominantly educational in nature.)

Earned income credit (EIC).(p3)

You may be able to take the EIC if:
New for 2009 is an increase in the amount of earned income credit for taxpayers with three or more qualifying children.
You can elect to include combat pay as earned income for purposes of claiming the EIC.
The maximum investment income you can have and still get the credit has increased to $3,100.
For more information, see Publication 596, Earned Income Credit (EIC).

Additional child tax credit.(p3)

The earned income threshold generally needed to qualify for the additional child tax credit is reduced to $3,000.

Credit to certain government retirees.(p3)

If you are a government retiree and you did not receive an economic recovery payment as a recipient of social security, supplemental social security, railroad retirement, and veterans disability compensation or pension benefits, you are allowed a credit of $250 ($500 if both you and your spouse are government retirees and you file jointly). The credit is refundable. See Worksheet 12.

Nonbusiness energy property credit.(p3)

This credit, which expired after 2007, has been reinstated. The amount of the credit has increased from 10% to 30%, limited to a $1,500 total amount for 2009 and 2010 installations. It also has been expanded to include certain asphalt roofs and stoves that burn biomass fuel.

Residential energy efficient property credit.(p3)

The 30% credit for qualified solar hot water property, geothermal heat pumps, and wind energy property, is no longer limited to $2,000 per year. However, there is a $500 credit limit on qualified fuel cell property expenditures.

Increased alternative fuel vehicle refueling property credit.(p3)

The credit for alternative fuel vehicle fueling property increases to 50%. For property placed in service during 2009 and 2010 at your main home, the credit limit increases to $2,000.

Credit for qualified plug-in electric vehicles.(p3)

The electric vehicle credit is now limited to plug-in electric vehicles. The maximum credit for a qualified vehicle acquired after February 17, 2009, is $2,500.

Plug-in conversion credit.(p3)

A new credit is available for converting a motor vehicle to a qualified plug-in electric drive motor vehicle. The maximum credit is $4,000, and will be claimed as part of the alternative motor vehicle credit.

Build America tax credit bonds.(p3)

The credit available to taxpayers from Build America bonds must be included in income as interest. Any unused credit is refundable.

First-time homebuyer credit.(p3)

You may be able to claim a refundable credit of up to $8,000 if you are a first-time homebuyer and buy a principal residence after December 31, 2008, and before December 1, 2009.

Increased health coverage tax credit.(p3)

For individuals who are eligible trade adjustment assistance (TAA) recipients, alternative TAA recipients, or eligible Pension Benefit Guaranty Corporation pension recipients, the credit for the cost of health insurance increases. This credit also is available to eligible TAA recipients who are not currently enrolled in a training program.

Decreased estimated tax payment for certain small businesses.(p3)

For certain small businesses, your required estimated tax payment for the year is the lesser of 90% of your 2008 tax or 90% of your estimated 2009 tax. This rule applies to the following businesses:




Photographs of missing children.(p4)

The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.


The federal income tax is a pay-as-you-go tax. You must pay the tax as you earn or receive income during the year.
As a wage earner, you pay federal income tax by having it withheld from your pay during the year. This is your "withholding." Your withholding is based on the number of allowances you claim when you file Form W-4, Employee's Withholding Allowance Certificate, with your employer.
The purpose of this publication is to help you check your withholding and, if necessary, prepare a new Form W-4 to adjust your withholding. When you first start a new job, you must fill out a Form W-4 and give it to your employer to establish your initial withholding. You can adjust your withholding by giving a new Form W-4 to your employer at any time.



If you have not changed jobs, you generally do not have to give your employer a new Form W-4 each year unless you need to adjust your withholding.
For more detailed information about Form W-4, see chapter 1 of Publication 505, Tax Withholding and Estimated Tax.

Nonresident aliens.(p4)


Before completing Form W-4, nonresident alien employees should see the instructions for Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual. Also see chapter 8 of Publication 519, U.S. Tax Guide for Aliens, for important information on withholding.

Comments and suggestions.(p4)


We welcome your comments about this publication and your suggestions for future editions.
You can write to us at the following address:

Internal Revenue Service 
Individual Forms and Publications Branch 
1111 Constitution Ave. NW, IR-6526 
Washington, DC 20224

We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.
You can email us at * (The asterisk must be included in the address.) Please put "Publications Comment" on the subject line. Although we cannot respond individually to each email, we do appreciate your feedback and will consider your comments as we revise our tax products.

Ordering forms and publications.(p4)

Visit to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received.

Internal Revenue Service 
1201 N. Mitsubishi Motorway 
Bloomington, IL 61705-6613


Tax questions.(p4)

If you have a tax question, check the information available on or call 1-800-829-1040. We cannot answer tax questions sent to either of the above addresses.

Checking Your Withholding(p4)


previous topic occurrence Checking Your Withholding next topic occurrence

This section explains why, when, and how to check your withholding to see if you will have enough, but not too much, tax withheld for 2009. Also, you may want to use the withholding calculator on

Why Should I Check My Withholding?(p4)


Why Should I Check My Withholding?

You should try to have your withholding match your actual tax liability. If not enough tax is withheld, you will owe tax at the end of the year and may have to pay interest and a penalty. If too much tax is withheld, you will lose the use of that money until you get your refund.
Always check your withholding if there are personal or financial changes in your life or changes in the law that might change your tax liability. See Figure 1 (next page) for examples.

Figure 1. Personal and Financial Changes

Lifestyle changeMarriage
Birth or adoption of child
Loss of an exemption
Purchase of a new home
Wage incomeYou or your spouse start or stop working, or start or stop a second job
Increased or decreased income not subject to withholdingInterest income
Capital gains
Self-employment income
IRA (including Roth IRA)
Increased or decreased adjustments to incomeIRA deduction
Student loan interest deduction
Alimony expense
Increased or decreased itemized deductions or tax creditsMedical expenses
Interest expense
Gifts to charity
Job expenses
Education credit
Child tax credit

When Should I Check My Withholding?(p5)


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

The earlier in the year you check your withholding, the easier it is to get the right amount of tax withheld.
You should check your withholding when any of the following situations occur.
  1. You receive a paycheck stub (statement) covering a full pay period in 2009, showing tax withheld based on 2009 tax rates.
  2. You prepare your 2008 tax return and get a:
    1. Big refund, or
    2. Balance due that is:
      1. More than you can comfortably pay, or
      2. Subject to a penalty.
  3. There are changes in your life or financial situation that affect your tax liability. See Figure 1 above.
  4. There are changes in the tax law that affect your tax liability. See Tax Law Changes, next.
You must give your employer a new Form W-4 to adjust your withholding within 10 days of any event that decreases the number of withholding allowances you can claim, or requires you to change to single status.

Tax Law Changes(p5)


Tax Law Changes

If there are tax law changes that increase your tax for 2009 and you do not increase your withholding, you may have to pay tax when you file your return. If there are changes that decrease your tax for 2009 and you do not decrease your withholding, you may get a larger refund. You can get this money back earlier by reducing your withholding.
For information about changes in the law for 2008 and 2009, get Publication 553, Highlights of 2008 Tax Changes, or visit the IRS website at Click on More Forms and Publications, and then on What's Hot in forms and publications.

How Do I Check My Withholding?(p5)


How Do I Check My Withholding?

You can use the worksheets and tables in this publication to see if you are having the right amount of tax withheld.
Follow these steps.
  1. Fill out Worksheet 1 (see page 13) to project your total federal income tax liability for 2009.
  2. Fill out Worksheet 9 (see page 20) to project your total federal withholding for 2009 and compare that with your projected tax liability from Worksheet 1.
If you are not having enough tax withheld, line 6 of Worksheet 9 will show you how much more to have withheld each payday.
If you are having more tax withheld than necessary, line 5 of Worksheet 9 refers you to How Do I Decrease My Withholding, later.

What If Not Enough Tax Is Being Withheld?(p5)


previous topic occurrence Adjustment, Withholding next topic occurrence

If not enough tax will be withheld, you should give your employer a new Form W-4 showing either a reduced number of withholding allowances or an additional amount to be withheld from your pay. See How Do I Increase My Withholding, on page 6.
There is a good chance you are not having enough tax withheld if:
If your employer cannot withhold enough additional tax from your pay, you may need to make estimated tax payments. This might be the case if your pay is low and you have substantial nonwage income, such as interest, dividends, capital gains, or earnings from self-employment. For more information on estimated tax payments, see chapter 2 of Publication 505.

What If Too Much Tax Is Being Withheld?(p6)


If too much tax is withheld, you may receive a large refund when you file your return. If you would prefer to receive the money during the year, you should see if you qualify to have less tax withheld. If so, give your employer a new Form W-4 showing more withholding allowances.
There is a good chance you are having too much tax withheld if:



Adjustments to income are listed on Form 1040 and Form 1040A near the bottom of page 1. Itemized deductions appear on Schedule A (Form 1040). Credits appear on page 2 of Form 1040 and Form 1040A. See also Figures 1 (page 5) and 2 (page 8).
previous pagePrevious Page: Publication 915 - Social Security and Equivalent Railroad Retirement Benefits - How To Get Tax Help
next pageNext Page: Publication 919 - How Do I Adjust My Tax Withholding? - Adjusting Your Withholding
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication