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Publication 505 (2021), Tax Withholding and Estimated Tax

  • Publication 505 – Introductory Material

    • Introduction

      • Nonresident aliens.

      • Final regulations on income tax withholding.

      • Comments and suggestions.

      • Getting answers to your tax questions.

      • Getting tax forms, instructions, and publications.

      • Ordering tax forms, instructions, and publications.

    • What’s New for 2021

    • Reminders

  • Tax Withholding for 2021

    • Introduction

    • Useful Items – You may want to see:

    • Salaries and Wages

      • Military retirees.

      • Household workers.

      • Farmworkers.

      • Differential wage payments.

      • Determining Amount of Tax Withheld Using Form W-4

        • Step 1.

        • Step 2.

        • Step 3.

        • Step 4.

        • New Job

          • Employee also receiving pension income.

        • Changing Your Withholding

          • Change of status resulting in withholding less than your tax liability.

          • Change of status resulting in withholding that will cover your tax liability.

        • Checking Your Withholding

        • When Should You Check Your Withholding?

        • How Do You Check Your Withholding?

        • How Do You Increase Your Withholding?

          • Requesting an additional amount be withheld.

          • What if I have more than one job or my spouse also has a job?

        • How Do You Decrease Your Withholding?

        • Tax Credits

        • When Will Your New Form W-4 Go Into Effect?

        • Retirees Returning to the Workforce

      • Getting the Right Amount of Tax Withheld

        • Part-Year Method

          • How to apply for the part-year method.

        • Cumulative Wage Method

        • Aids for Figuring Your Withholding

          • Tax Withholding Estimator.

      • Rules Your Employer Must Follow

        • New Form W-4.

        • No Form W-4.

        • Repaying withheld tax.

        • IRS review of your withholding.

      • Exemption From Withholding

        • Students.

        • Itemizing deductions or claiming credits.

        • Claiming exemption from withholding.

        • An exemption is good for only 1 year.

      • Supplemental Wages

        • Expense allowances.

        • Accountable plan.

        • Nonaccountable plan.

      • Penalties

    • Tips

      • Reporting tips to your employer.

      • How employer figures amount to withhold.

      • Not enough pay to cover taxes.

      • Tips not reported to your employer.

      • Allocated tips.

      • More information.

    • Taxable Fringe Benefits

      • When benefits are considered paid.

      • Special rule.

      • Exceptions.

      • How withholding is figured.

      • How your employer reports your benefits.

      • More information.

    • Sick Pay

      • Union agreements.

      • Form W-4S.

      • Estimated tax.

    • Pensions and Annuities

      • Nontaxable part.

      • Periodic Payments

        • Withholding Allowances

          • Form W-4P worksheets.

        • Personal Allowances Worksheet

          • Filing Status (worksheet lines A, B, and C).

          • Single or married but filing separately from your spouse.

          • Married filing jointly or qualifying widow(er).

          • Head of household.

          • Child tax credit (worksheet line D).

          • Credit for other dependents (worksheet line E).

          • Other credits (worksheet line F).

          • Total personal allowances (worksheet line G).

        • Deductions, Adjustments, and Additional Income Worksheet

          • Not itemizing deductions.

          • Itemized deductions (worksheet line 1).

          • Adjustments to income (worksheet line 4).

          • Nonwage income (worksheet line 6).

          • Net deductions and adjustments (worksheet line 8).

        • Multiple Pensions/More-Than-One-Income Worksheet

          • Reducing your allowances (worksheet lines 1–3).

          • Other amounts owed.

          • Withholding rules.

          • Effective date of withholding certificate.

      • Nonperiodic Payments

      • Eligible Rollover Distributions

      • Choosing Not To Have Income Tax Withheld

        • Payments delivered outside the United States.

        • Notice required of payer.

        • Revoking a choice not to have tax withheld.

    • Gambling Winnings

      • Exception.

      • Form W-2G.

      • Information to give payer.

      • Identical wagers.

      • Backup withholding on gambling winnings.

    • Unemployment Compensation

      • Form 1099-G.

    • Federal Payments

      • More information.

      • Payment to shareholders of Alaska Native Corporations (ANCs).

    • Backup Withholding

      • Payments subject to backup withholding.

      • Payments not subject to backup withholding.

      • Withholding rules.

      • Taxpayer identification number (TIN).

      • How to prevent or stop backup withholding.

      • Underreported interest or dividends.

      • Penalties.

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

        • Worksheet 1-2. Exemption From Withholding for Dependents Age 65 or Older or Blind

        • Worksheet 1-3. Projected Tax for 2021

        • Worksheet 1-4. Tax Computation Worksheets for 2021

        • Tax Computation Worksheet for 2021 (Continued)

  • Estimated Tax for 2021

    • Introduction

    • Topics – This chapter discusses:

    • Useful Items – You may want to see:

    • Worksheets.

    • Who Does Not Have To Pay Estimated Tax

      • Estimated tax not required.

    • Who Must Pay Estimated Tax

      • General Rule

      • Married Taxpayers

        • 2020 separate returns and 2021 joint return.

        • 2020 joint return and 2021 separate returns.

      • Special Rules

        • Farmers and Fishermen

          • Gross income.

          • Joint returns.

          • Gross income from farming.

          • Gross income from fishing.

        • Higher Income Taxpayers

      • Aliens

      • Estates and Trusts

    • How To Figure Estimated Tax

      • 2021 Estimated Tax Worksheet

        • Expected AGI—Line 1

          • Total income.

          • Adjustments to income.

        • Expected Taxable Income— Line 2

          • Itemized deductions—line 2a.

          • Standard deduction—line 2a.

          • No standard deduction.

          • Charitable contributions—line 2a.

        • Expected Taxes and Credits— Lines 4–11c

          • Step 1.

          • Tax on child’s investment income.

          • Tax on net capital gain.

          • Step 2.

          • Step 3.

          • Step 4.

          • Step 5.

          • Step 6.

        • Required Annual Payment— Line 12c

          • General rule.

          • Special rules.

          • Higher income taxpayers.

          • Example.

          • Farmers and fishermen.

          • Total tax for 2020—line 12b.

        • Total Estimated Tax Payments Needed—Line 14a

          • Withholding—line 13.

    • When To Pay Estimated Tax

      • Saturday, Sunday, holiday rule.

      • January payment.

      • Fiscal-year taxpayers.

      • When To Start

        • No income subject to estimated tax during first period.

        • How much to pay to avoid penalty.

      • Farmers and Fishermen

        • Fiscal year farmers and fishermen.

    • How To Figure Each Payment

      • Regular Installment Method

        • Change in estimated tax.

        • Underpayment penalty.

      • Annualized Income Installment Method

        • Instructions for the 2021 Annualized Estimated Tax Worksheet (Worksheet 2-7)

          • Line 1.

          • Self-employment income.

          • Line 4.

          • Line 7.

          • Line 12.

          • Tax on child’s investment income.

          • Tax on net capital gain.

          • Tax on qualified dividends and capital gains.

          • Line 13.

          • Line 15.

          • Line 18.

          • Line 20.

          • Line 29.

          • Line 31.

          • Nonresident aliens.

      • Estimated Tax Payments Not Required

    • How To Pay Estimated Tax

      • Credit an Overpayment

      • Pay Online

      • Pay by Phone

        • Debit or credit card.

        • EFTPS.

      • Pay by Mobile Device

      • Pay by Cash

      • Pay by Check or Money Order Using the Estimated Tax Payment Voucher

        • Notice to taxpayers presenting checks.

        • No checks of $100 million or more accepted.

        • Joint estimated tax payments.

        • Change of address.

        • Worksheets for Chapter 2

        • 2021 Tax Rate Schedules

        • Worksheet 2-2.2021 Estimated Tax Worksheet—Line 1 Estimated Taxable Social Security and Railroad Retirement Benefits

        • Worksheet 2-3.2021 Estimated Tax Worksheet—Lines 1 and 9 Estimated Self-Employment Tax and Deduction Worksheet

        • Worksheet 2-4.2021 Estimated Tax Worksheet—Line 2 Standard Deduction Worksheet

        • Worksheet 2-5.2021 Estimated Tax Worksheet—Line 4 Qualified Dividends and Capital Gain Tax Worksheet

        • Worksheet 2-5. 2021 Estimated Tax Worksheet—Line 4 Qualified Dividends and Capital Gain Tax Worksheet 

        • Worksheet 2-6.2021 Estimated Tax Worksheet—Line 4 Foreign Earned Income Tax Worksheet

        • Worksheet 2-7. 2021 Annualized Estimated Tax Worksheet

        • Worksheet 2-7. 2021 Annualized Estimated Tax Worksheet 

        • Worksheet 2-8. 2021 Annualized Estimated Tax Worksheet—Line 10 Qualified Dividends and Capital Gain Tax Worksheet

        • Worksheet 2-8. 2021 Annualized Estimated Tax Worksheet—Line 10 Qualified Dividends and Capital Gain Tax Worksheet

        • Worksheet 2-9.2021 Annualized Estimated Tax Worksheet—Line 10 Foreign Earned Income Tax Worksheet

  • How To Get Tax Help

    • Preparing and filing your tax return.

    • Free options for tax preparation.

    • Using online tools to help prepare your return.

    • Need someone to prepare your tax return?

    • Coronavirus.

    • Tax reform.

    • Employers can register to use Business Services Online.

    • IRS social media.

    • Watching IRS videos.

    • Online tax information in other languages.

    • Free interpreter service.

    • Getting tax forms and publications.

    • Access your online account (individual taxpayers only).

    • Using direct deposit.

    • Getting a transcript of your return.

    • Reporting and resolving your tax-related identity theft issues.

    • Checking on the status of your refund.

    • Making a tax payment.

    • What if I can’t pay now?

    • Filing an amended return.

    • Checking the status of your amended return.

    • Understanding an IRS notice or letter you’ve received.

    • Contacting your local IRS office.

    • The Taxpayer Advocate Service (TAS) Is Here To Help You

      • What Is TAS?

      • How Can You Learn About Your Taxpayer Rights?

      • What Can TAS Do For You?

      • How Can You Reach TAS?

      • How Else Does TAS Help Taxpayers?

      • TAS for Tax Professionals

    • Low Income Taxpayer Clinics (LITCs)

  • Publication 505 – Additional Material

Publication 505 (2021), Tax Withholding and Estimated Tax

For use in 2021


Publication 505 – Introductory Material

Introduction

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. There are two ways to pay as you go.

  • Withholding. If you are an employee, your employer probably withholds income tax from your pay. In addition, tax may be withheld from certain other income, such as pensions, bonuses, commissions, and gambling winnings. The amount withheld is paid to the IRS in your name.

  • Estimated tax. If you don’t pay your tax through withholding, or don’t pay enough tax that way, you might have to pay estimated tax. People who are in business for themselves will generally have to pay their tax this way. You may have to pay estimated tax if you receive income such as dividends, interest, capital gains, rents, and royalties. Estimated tax is used to pay not only income tax, but other taxes such as self-employment tax and alternative minimum tax.

This publication explains both of these methods. It also explains how to take credit on your return for the tax that was withheld and for your estimated tax payments.

If you didn’t pay enough tax during the year, either through withholding or by making estimated tax payments, you may have to pay a penalty. Generally, the IRS can figure this penalty for you.

Nonresident aliens.

Before completing Form W-4, Employee’s Withholding Certificate, nonresident alien employees should see Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens (Rev. January 2020), which provides nonresident aliens who are not exempt from withholding instructions for completing Form W-4, and 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 Pub. 519, U.S. Tax Guide for Aliens, for important information on withholding.

Final regulations on income tax withholding.

Final regulations on income tax withholding were published in the Federal Register on October 6, 2020 (at 85 FR 63019). The regulations implement changes made by the Tax Cuts and Jobs Act and reflect the redesigned withholding certificate (Form W-4). See the regulations for detailed information on income tax withholding.

Comments and suggestions.

We welcome your comments about this publication and suggestions for future editions.

You can send us comments through

IRS.gov/FormComments

. Or, you can write to the Internal Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224.

Although we can’t respond individually to each comment received, we do appreciate your feedback and will consider your comments and suggestions as we revise our tax forms, instructions, and publications. Do not send tax questions, tax returns, or payments to the above address.

Getting answers to your tax questions.

If you have a tax question not answered by this publication or the

How To Get Tax Help

section at the end of this publication, go to the IRS Interactive Tax Assistant page at

IRS.gov/Help/ITA

where you can find topics by using the search feature or viewing the categories listed.

Getting tax forms, instructions, and publications.

Visit

IRS.gov/Forms

to download current and prior-year forms, instructions, and publications.

Ordering tax forms, instructions, and publications.

Go to

IRS.gov/OrderForms

to order current forms, instructions, and publications; call 800-829-3676 to order prior-year forms and instructions. The IRS will process your order for forms and publications as soon as possible. Do not resubmit requests you’ve already sent us. You can get forms and publications faster online.

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What’s New for 2021

Use your 2020 tax return as a guide in figuring your 2021 estimated tax, but be sure to consider the following.

Postponed filing date does not affect estimated tax payment due dates. The IRS postponed the date to file 2020 Forms 1040 and 1040-SR and to pay any related tax due until May 17, 2021. This does not affect the due dates for estimated tax payments for 2021. The first estimated tax payment is due April 15, 2021. .This is an Image: caution.gifAny payment made with a timely extension request after April 15, 2021, and on or before May 17, 2021, that you later have available as a refund on your 2020 return and elect to credit to your 2021 estimated tax will be credited to your estimated tax on the date the payment was made, not as of April 15, 2021, and will not be a timely payment for the first quarter 2021’s estimated taxes..

American Rescue Plan. The American Rescue Plan of 2021 (ARP) was enacted on March 11, 2021. The following provisions may affect your tax situation for 2021.

  • Expanded dependent care assistance. The ARP expanded the child and dependent care tax credit for 2021 and made it refundable for certain taxpayers. For 2021, the dollar limit on qualifying expenses increases to $8,000 for one child and $16,000 for two or more children. The rules for calculating the credit have also changed, making the credit available to taxpayers with up to $438,000 of adjusted gross income. Additionally, for taxpayers who receive dependent care benefits from their employer, the dollar limit of the exclusion amount increases for 2021. For more information, see the Instructions for Form 2441 and Pub. 503.

  • Child tax credit. Under the ARP, the child tax credit has been enhanced for 2021. The child tax credit has been extended to qualifying children under age 18. Depending on modified adjusted gross income, you may receive an enhanced credit amount of up to $3,600 for a qualifying child under age 6 and up to $3,000 for a qualifying child over age 5 and under age 18. The enhanced credit amount begins to phase out where modified adjusted gross income exceeds $150,000 in the case of a joint return or surviving spouse, $112,500 in the case of a head of household, and $75,000 in all other cases.

    If you (or your spouse if filing jointly) lived in the United States for more than half the year, the child tax credit will be fully refundable even if you don’t have earned income. If you don’t meet this residency requirement, your child tax credit will be a combination of a nonrefundable child tax credit and a refundable additional child tax credit that is limited—as was the case in 2020.

    The credit for other dependents has not been enhanced and is figured as it was in 2020.

  • Premium tax credit (PTC). The ARP expanded the PTC by eliminating the limitation that a taxpayer’s household income may not exceed 400% of the Federal Poverty Line and generally increases the credit amounts. In addition, in 2021, if you receive unemployment compensation, you are generally eligible to claim the PTC if you meet the other requirements. For more information, see Form 8962 and its instructions and Pub. 974.

  • Earned income credit (EIC). The ARP makes the EIC more widely available to certain taxpayers.

  • EIC rules for taxpayers without a qualifying child. For 2021, special rules apply if you are claiming the EIC without a qualifying child. In these cases, the minimum age has been lowered to age 19 and for former foster youth or qualified homeless youth it is further lowered to age 18. The minimum age for specified students is age 24. Additionally, you no longer need to be under age 65 to claim the EIC without a qualifying child. The amount of the credit has been increased and the phaseout income limits at which you can claim the credit have been expanded.

  • Rules for separated spouses. If you are married but don’t file a joint return, you may qualify to claim the EIC if you live with your qualifying child for more than half the year and either live apart from your spouse for the last 6 months of 2021 or are legally separated according to your state law under a written separation agreement or a decree of separate maintenance and do not live in the same household as your spouse at the end of 2021.

  • Investment income. In 2021, the amount of investment income you can receive and still be eligible to claim the EIC has increased to $10,000.

  • Extension and expansion of COVID-19 credit for qualified sick and family leave wages. The ARP provides that certain self-employed individuals can claim credits for up to 10 days of “paid sick leave,” and up to 60 days of “paid family leave,” if they are unable to work or telework due to circumstances related to coronavirus. Self-employed individuals may claim these credits for the period beginning on April 1, 2021, and ending September 30, 2021. Eligible self-employed individuals may fund these sick leave and family leave equivalent credits by taking into account the credit to which the individual is entitled and will claim on Form 1040 or 1040-SR in determining estimated tax payments. More information on these credits is available at

    IRS.gov/Coronavirus-tax-relief-and-economic-impact-payments

    .

The COVID-19 credit for qualified sick and family leave wages has been extended. The Families First Coronavirus Response Act (FFCRA) provided that certain self-employed individuals could claim credits for up to 10 days of “paid sick leave” if they were unable to work or telework due to circumstances related to coronavirus and up to 50 days of “paid family leave” if they were unable to work or telework because they are caring for a child due to circumstances related to coronavirus. Under the FFCRA, self-employed individuals were allowed to claim these credits for the period beginning on April 1, 2020, and ending December 31, 2020; however, the COVID-related Tax Relief Act of 2020 extended the period and allows self-employed individuals who are otherwise eligible to claim the credits through March 31, 2021. Eligible self-employed individuals may fund these sick leave and family leave equivalent credits by taking into account the credit to which the individual is entitled and will claim on Form 1040 or 1040-SR in determining estimated tax payments.The ARP extended and expanded the credits that certain self-employed individuals can claim for paid sick leave and paid family leave due to circumstances related to coronavirus. See Extension and expansion of COVID-19 credit for qualified sick and family leave wages, earlier. More information on these credits is available at

IRS.gov/Coronavirus-tax-relief-and-economic-impact-payments

.

Standard deduction amount increased. For 2021, the standard deduction amount has been increased for all filers, and the amounts are as follows.

  • Single or Married Filing Separately—$12,550.

  • Married Filing Jointly or Qualifying Widow(er)—$25,100.

  • Head of Household—$18,800.

Lifetime learning credit income limits. In order to claim a lifetime learning credit, your modified adjusted gross income (MAGI) must be less than $90,000 ($180,000 if married filing jointly).

Tuition and fees deduction not available. The tuition and fees deduction is not available after 2020. Instead, the income limitations for the lifetime learning credit have been increased.

Retirement savings contribution credit income limits increased. In order to claim this credit for 2021, your MAGI must be less than $33,000 ($66,000 if married filing jointly; $49,500 if head of household).

Adoption credit or exclusion. The maximum adoption credit or exclusion for employer-provided adoption benefits has increased to $14,440. In order to claim either the credit or exclusion, your MAGI must be less than $256,660.

.This is an Image: caution.gifThe worksheets in this publication reflect the changes described in What’s New for 2021. However, because the Tax Withholding Estimator doesn’t reflect all these changes, you should use the worksheets in this publication for certain changes. Go to

IRS.gov/W4App

for additional information..

Reminders

Future developments. The IRS has created a page on IRS.gov for information about Pub. 505 at

IRS.gov/Pub505

. Information about any future developments affecting Pub. 505 (such as legislation enacted after we release it) will be posted on that page.

Social security tax.

Generally, each employer for whom you work during the tax year must withhold social security tax up to the annual limit. The annual limit is $142,800 in 2021.

Individual taxpayer identification number (ITIN) renewal. If you were assigned an ITIN before January 1, 2013, or if you have an ITIN that you haven’t included on a tax return in the last 3 consecutive years, you may need to renew it. For more information, see the Instructions for Form W-7.

Advance payments of the premium tax credit. If you buy health insurance through the Health Insurance Marketplace, you may be eligible to have advance payments of the premium tax credit paid on your behalf to the insurance company. Receiving too little or too much in advance will affect your refund or balance due. Promptly report changes in your income or family size to your Marketplace. See Form 8962 and its instructions for more information.

Additional Medicare Tax. Generally, a 0.9% Additional Medicare Tax applies to Medicare wages, Railroad Retirement Tax Act compensation, and self-employment income over $200,000 if you are filing as single, head of household, or qualifying widow(er); over $250,000 if you are married filing jointly; and over $125,000 if you are married filing separately. You may need to include this amount when figuring your estimated tax. You may also request that your employer deduct and withhold an additional amount of income tax withholding from your wages on Form W-4.

Net Investment Income Tax (NIIT). You may be subject to NIIT. NIIT is a 3.8% tax on the lesser of net investment income or the excess of your MAGI over $200,000 ($250,000 if married filing jointly or qualifying widow(er); $125,000 if married filing separately). NIIT may need to be included when figuring estimated tax. You may also request that your employer deduct and withhold an additional amount of income tax withholding from your wages on Form W-4.

Access your online account (Individual taxpayers only). Go to

IRS.gov/Account

to securely access information about your federal tax account.

  • View the amount you owe, pay online, or set up an online payment agreement;

  • Access your tax records online; and

  • Review the past 5 years of your payment history.

Go to

IRS.gov/SecureAccess

to review the required identity authentication process.

Photographs of missing children. The IRS is a proud partner with the

National Center for Missing & Exploited Children® (NCMEC)

. 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 800-THE-LOST (800-843-5678) if you recognize a child.

1. Tax Withholding for 2021

Introduction

This chapter discusses income tax withholding on:

  • Salaries and wages,

  • Tips,

  • Taxable fringe benefits,

  • Sick pay,

  • Pensions and annuities,

  • Gambling winnings,

  • Unemployment compensation, and

  • Certain federal payments.

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.

Useful Items

You may want to see:

Form (and Instructions)

  • W-4 Employee’s Withholding 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

How To Get Tax Help

at the end of this publication for information about getting these publications and forms.

Salaries and Wages

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

, later, for definitions of accountable and nonaccountable plans.

If your income is low enough that you won’t have to pay income tax for the year, you may be exempt from withholding. This is explained under

Exemption From Withholding

, later.

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

.

Military retirees.

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.

Household workers.

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 don’t have enough income tax withheld, you may have to pay estimated tax, as discussed in

chapter 2

.

Farmworkers.

Generally, income tax is withheld from your cash wages for work on a farm unless your employer both:

  • Pays you cash wages of less than $150 during the year, and

  • Has expenditures for agricultural labor totaling less than $2,500 during the year.

Differential wage payments.

When employees are on leave from employment for military duty, some employers make up the difference between the military pay and civilian pay. Payments to an employee who is on active duty for a period of more than 30 days will be subject to income tax withholding, but not subject to social security or Medicare taxes. The wages and withholding will be reported on Form W-2, Wage and Tax Statement.

Determining Amount of Tax Withheld Using Form W-4

The amount of income tax your employer withholds from your regular pay depends on three things.

  • The amount you earn in each payroll period.

  • Your payroll period.

  • The information you give your employer on Form W-4.

Form W-4 includes four steps that will give information to your employer to figure your withholding. Complete Steps 2 through 4 only if they apply to you.

Step 1.

Enter your personal information, including your anticipated filing status. Your anticipated filing status will determine the standard deduction and tax rates used to figure your withholding.

Step 2.

Complete this step if you (1) hold more than one job at a time, or (2) are married and plan to file a joint return and your spouse also works.

.This is an Image: caution.gifIf you or your spouse have another job, complete Steps 3 through 4(b) on only one Form W-4. Your withholding will be most accurate if you do this on the Form W-4 for the highest paying job..

Step 3.

Complete this step if you have dependents and think you may be eligible to claim the child tax credit or credit for other dependents on your tax return. Also, complete this step if you want to include an estimate of your other tax credits (for example, an education credit or the foreign tax credit).

Step 4.

Complete this optional step to make other adjustments.

  • Other income (not from jobs).

  • Deductions (other than the standard deduction).

  • Any additional amounts you want to withhold from each check.

New Job

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. See

Part-Year Method

, later, for more information.

Employee also receiving pension income.

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 between your pension and job in any manner.

Changing Your Withholding

During the year, changes may occur to your marital status, 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.

If a change in personal circumstances reduces the amount of withholding you are entitled to claim, you are required to give your employer a new Form W-4 within 10 days after the change occurs.

You can choose to rely on the proposed regulations in determining whether you are required to furnish a new Form W-4 to your employer in the event of a change of status, and, if you make that choice, the following rules apply.

Change of status resulting in withholding less than your tax liability.

If you have one of the changes in the following bullet list and you won’t have enough tax withheld for the remainder of 2021 to cover your income tax liability for 2021, you are required to furnish a new Form W-4 to your employer within 10 days after the date of the change.

  • Your filing status changes from Married Filing Jointly (or Qualifying Widow(er)) to Head of Household or Single (or Married Filing Separately) or from Head of Household to Single (or Married Filing Separately).

  • You or your spouse start another job, and you chose to use the Multiple Jobs Worksheet or the Tax Withholding Estimator to account for your other job in determining your withholding.

  • You or your spouse start another job, and as a result file a new 2021 Form W-4, and you or your spouse select the checkbox in Step 2(c) (in this case, you must furnish a new Form W-4 for your first job and select the checkbox in Step 2(c)).

  • You or your spouse expect a raise of more than $10,000 in regular wages (not a bonus) at a second or third job, and the Form W-4, Step 2(c), checkbox is not selected on your Forms W-4.

  • You no longer expect to be able to claim a Child Tax Credit you took into account on a previously furnished Form W-4.

  • Your other credits you took into account on a previously furnished Form W-4 decrease by more than $500.

  • Your deductions decrease by more than $2,300 from the amount you took into account on a previously furnished Form W-4.

  • You no longer reasonably expect to claim exemption from withholding.

Change of status resulting in withholding that will cover your tax liability.

If you have a change of status listed in the previous section, you don’t have to furnish a new Form W-4 for 2021 if after the change you will have enough tax withheld for the remainder of 2021 to cover your income tax liability. However, if you will have enough tax withheld for 2021 to cover your income tax liability after a change or changes in status, but your filing status changes from Married Filing Jointly (or Qualifying Widow(er)) to Head of Household or to Single (or Married Filing Separately) or from Head of Household to Single (or Married Filing Separately) during 2021, you are required to furnish your employer a new Form W-4 for 2022 by December 1, 2021, or, if later, 10 days after the date of the change in filing status, to take effect in 2022.

Otherwise, if you want to change your withholding for any other reason, you can generally do that whenever you wish. See

Table 1-1

for examples of personal and financial changes you should consider.

Table 1-1. Personal and Financial Changes

Factor Examples
Lifestyle change Marriage
Divorce
Birth or adoption of child
Purchase of a new home
Retirement
Filing chapter 11 bankruptcy
Wage income You or your spouse start or stop working, or start or stop a second job
Change in the amount of taxable income not subject to withholding Interest income
Dividends
Capital gains
Self-employment income
IRA (including certain Roth
IRA) distributions
Change in the amount of adjustments to income IRA deduction
Student loan interest
deduction
Alimony expense
Change in the amount of itemized deductions or tax credits Medical expenses
Taxes
Interest expense
Gifts to charity
Dependent care expenses
Education credit
Child tax credit
Earned income credit

 

If you change the amount of your withholding, you can request that your employer withhold using the

Cumulative Wage Method

, later.

Checking Your Withholding

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 much or too little. If too much or too little tax is being withheld, you should give your employer a new Form W-4 to change your withholding. You can get a blank Form W-4 from your employer or print the form from IRS.gov.

.This is an Image: taxtip.gifYou can use the Tax Withholding Estimator at

IRS.gov/W4App

instead of the worksheets in this publication or included with Form W-4 or W-4P to determine whether you need to have your withholding increased or decreased. .

The worksheets in this publication reflect the changes described in What’s New for 2021. However, because the Tax Withholding Estimator doesn’t reflect all these changes, you should use the worksheets in this publication for certain changes. Go to

IRS.gov/W4App

for additional information.

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

Table 1-1

for examples.

Note.

You can’t 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.

When Should You Check Your Withholding?

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 2021 showing tax withheld based on 2021 tax rates.

  2. You prepare your 2020 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

    Table 1-1

    .

  4. There are changes in the tax law that affect your tax liability.

How Do You Check Your Withholding?

You can use the worksheets and tables in this publication to see if you are having the right amount of tax withheld. You can also use the Tax Withholding Estimator at

IRS.gov/W4App

. If you use the worksheets and tables in this publication, follow these steps.

  1. Fill out Worksheet 1-3 to project your total federal income tax liability for 2021.

  2. Fill out Worksheet 1-5 to project your total federal withholding for 2021 and compare that with your projected tax liability from Worksheet 1-3.

If you are not having the correct amount of tax withheld, line 6 of Worksheet 1-5 will show you how to adjust the amount withheld each payday. For ways to increase the amount of tax withheld, see

How Do You Increase Your Withholding?

, later.

If line 5 of Worksheet 1-5 shows that you are having more tax withheld than necessary, see

How Do You Decrease Your Withholding?

, later, for ways to decrease the amount of tax you have withheld each payday.

Detailed instructions for completing a new Form W-4 to adjust your withholding follow Worksheet 1-5.

.This is an Image: caution.gifThe worksheets in this publication reflect the changes described in What’s New for 2021. However, because the Tax Withholding Estimator doesn’t reflect all these changes, you should use the worksheets in this publication for certain changes. Go to

IRS.gov/W4App

for additional information..

How Do You Increase Your Withholding?

You can increase your withholding by entering an additional amount that you want withheld from each paycheck on Form W-4.

Requesting an additional amount be withheld.

You can request that an additional amount be withheld from each paycheck by entering the additional amount in Step 4(c) of Form W-4. To see if you should request an additional amount be withheld, complete Worksheets 1-3 and 1-5. Complete a new Form W-4 if the amount on Worksheet 1-5, line 5:

  1. Is more than you want to pay with your tax return or in estimated tax payments throughout the year, or

  2. Would cause you to pay a penalty when you file your tax return for 2021.

What if I have more than one job or my spouse also has a job?

You are more likely to need to increase your withholding if you have more than one job or if you are married filing jointly and your spouse also works. If this is the case, you can increase your withholding for one or more of the jobs.

You can apply the amount on Worksheet 1-5, line 5, to only one job or divide it between the jobs any way you wish. For each job, determine the extra amount that you want to apply to that job and divide that amount by the number of paydays remaining in 2021 for that job. This will give you the additional amount to enter on the Form W-4 you will file for that job. You need to give your employer a new Form W-4 for each job for which you are changing your withholding.

Example.

Meg Green works in a store and earns $46,000 a year. Her husband John works in a factory, earns $68,000 a year, and has 49 pay periods left. In 2021, they will also have $184 in taxable interest and $1,000 of other taxable income. They expect to file a joint income tax return. Meg and John complete Worksheets 1-3, 1-4, and 1-5. Line 5 of Worksheet 1-5 shows that they will owe an additional $4,459 after subtracting their withholding for the year. They can divide the $4,459 any way they want. They can enter an additional amount on either of their Forms W-4, or divide it between them. They decide to have the additional amount withheld from John’s wages, so they enter $91 ($4,459 ÷ 49 remaining paydays) on his Form W-4 in Step 4(c).

How Do You Decrease Your Withholding?

If your completed Worksheets 1-3 and 1-5 show that you may have more tax withheld than your projected tax liability for 2021, you may be able to decrease your withholding by following the instructions in Worksheet 1-5.

Tax Credits

Table 1-2

shows many of the tax credits you may be able to use to decrease your withholding. For a complete list of credits you may be able to claim, see the 2020 Instructions for Forms 1040 and 1040-SR.

Step 3 of Form W-4 provides instructions for determining the amount of the child tax credit and the credit for other dependents. You can also include other tax credits in Step 3 of Form W-4. To do so, complete Worksheet 1-6 and add the amount from line 11 of that worksheet to the amount you are entering for other dependents in Step 3 of Form W-4. Including these credits will increase your paycheck and reduce the amount of any refund you may receive when you file your tax return.

When Will Your New Form W-4 Go Into Effect?

If the change is for the current year, your employer must put your new Form W-4 into effect no later than the start of the first payroll period ending on or after the 30th day after the day on which you give your employer your revised Form W-4.

If the change is for next year, your new Form W-4 won’t take effect until next year.

Retirees Returning to the Workforce

When you first began receiving your pension, you told the payer how much tax to withhold, if any, by completing Form W-4P, Withholding Certificate for Pension or Annuity Payments (or similar form). However, if your retirement pay is from the military or certain deferred compensation plans, you completed Form W-4 instead of Form W-4P. You completed either form based on your projected income at that time. Now that you are returning to the workforce, your new Form W-4 (given to your employer) and your Form W-4 or W-4P (on file with your pension plan) must work together to determine the correct amount of withholding for your new amount of income.

Use the worksheets that come with Form W-4P to figure out how many withholding allowances you are entitled to claim. Start off with the Personal Allowances Worksheet. Then, if you will be itemizing your deductions, claiming adjustments to income, or have additional income (such as interest or dividends), complete the Deductions, Adjustments, and Additional Income Worksheet.

The third worksheet, the Multiple Pensions/More-Than-One-Income Worksheet, is the most important for this situation. If you have more than one source of income, in order to have enough withholding to cover the tax on your higher income, you may need to claim fewer withholding allowances or request that your employer withhold an additional amount from each paycheck.

Once you have figured out how many allowances you are entitled to claim, look at the income from both your pension and your new job, and how often you receive payments. It is your decision how to divide up your withholding allowances between these sources of income. For example, you may want to “take home” most of your weekly paycheck to use as spending money and use your monthly pension to “pay the bills.” In that case, change your Form W-4P to zero allowances and claim all that you are entitled to on your Form W-4.

There are a couple of ways you can get a better idea of how much tax will be withheld when claiming a certain number of allowances.

  • Use the withholding tables in Pub.15-T, Federal Income Tax Withholding Methods. For determining the amount that will be withheld from a pension or annuity, use the tables in either Section 3 or Section 5 of Pub. 15-T, which are used for Forms W-4 from 2019 or earlier. The tables in those sections also apply to Forms W-4P, including 2021 Forms W-4P.

  • Contact your pension provider and your employer’s payroll department.

And remember, this isn’t a final decision. If you don’t get the correct amount of withholding with the first Forms W-4 and W-4P you submit, you should refigure your withholding using the information and worksheets in this publication, or the resources mentioned above.

You should go through this same process each time your life situation changes, whether it be for personal or financial reasons. You may need more tax withheld, or you may need less.

Table 1-2. Tax Credits for 2021

For more information about the… See…
Adoption credit Instructions for Form 8839
Credit for child and dependent care expenses Pub. 503, Child and Dependent Care Expenses
Child tax credit (including the additional child tax credit) 2020 Instructions for Forms 1040 and 1040-SR
Credit for other dependents 2020 Instructions for Forms 1040 and 1040-SR
Earned income credit Pub. 596, Earned Income Credit (EIC)
Education credits Pub. 970, Tax Benefits for Education
Credit for the elderly or the disabled Pub. 524, Credit for the Elderly or the Disabled
Foreign tax credit (except any credit that applies to wages not subject to U.S. income tax withholding because they are subject to income tax withholding by a foreign country) Pub. 514, Foreign Tax Credit for Individuals
General business credit Form 3800, General Business Credit
Health coverage tax credit Instructions for Form 8885
Mortgage interest credit Pub. 530, Tax Information for Homeowners
Qualified electric vehicle credit Form 8834
Credit for prior year minimum tax (if you paid alternative minimum tax in an earlier year) Instructions for Form 8801
Retirement savings contributions credit (saver’s credit) Pub. 590-A, Contributions to Individual Retirement Arrangements (IRAs)
Credit to holders of tax credit bonds Instructions for Form 8912
Premium tax credit Pub. 974, Premium Tax Credit (PTC)
Credits for sick leave and family leave for certain self-employed individuals Instructions for Form 7202

 

Getting the Right Amount of Tax Withheld

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 don’t 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, or unemployment compensation.

  • You will owe additional amounts with your return.

  • Your withholding is based on obsolete Form W-4 information for a substantial part of the year.

  • You work only part of the year.

  • You change the amount of your withholding during the year.

  • You are subject to Additional Medicare Tax or NIIT. If you anticipate liability for Additional Medicare Tax or NIIT, you may request that your employer withhold an additional amount of income tax withholding on Form W-4.

If any of these situations apply to you, you can use the Tax Withholding Estimator at

IRS.gov/W4App

to see if you need to change your withholding.

.This is an Image: caution.gifThe worksheets in this publication reflect the changes described in What’s New for 2021. However, because the Tax Withholding Estimator doesn’t reflect all these changes, you should use the worksheets in this publication for certain changes. Go to

IRS.gov/W4App

for additional information..

If you have self-employment income or owe self-employment tax, you should use the worksheets in this publication to determine if you should pay estimated tax.

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 can’t 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, don’t count those days. You won’t meet this requirement if you begin working before May 1 and expect to work for the rest of the year.

How to apply for the part-year method.

You must ask your employer in writing to 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 don’t expect to be employed more than 245 days during the current calendar year.

  • That you use the calendar year as your tax year.

Cumulative Wage Method

If you change your withholding 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, your payroll periods (weekly, biweekly, etc.) must have been the same since the beginning of the year.

Aids for Figuring Your Withholding

Tax Withholding Estimator.

If you are concerned that you may be having too much or too little income tax withheld from your pay, the IRS provides a withholding estimator on its website. Go to

IRS.gov/W4App

. It can help you determine the correct amount to be withheld any time during the year.

.This is an Image: caution.gifThe worksheets in this publication reflect the changes described in What’s New for 2021. However, because the Tax Withholding Estimator doesn’t reflect all these changes, you should use the worksheets in this publication for certain changes. Go to

IRS.gov/W4App

for additional information..

Rules Your Employer Must Follow

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.

New Form W-4.

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.

No Form W-4.

If you don’t give your employer a Form W-4, your employer should treat you as though you checked the box for Single or Married filing separately in Step 1(c) and made no entries in Step 2, Step 3, or Step 4 of the 2021 Form W-4. However, if you were working for the same employer in 2019, were paid wages in 2019, and failed to furnish a Form W-4, your employer should continue to treat you as single and claiming zero allowances on a 2019 Form W-4.

Repaying withheld tax.

If you find you are having too much tax withheld because you didn’t account for all your dependents or deductions you are entitled to, you should give your employer a new Form W-4. Your employer can’t 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 don’t 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 will reflect the full amount actually withheld, which you would claim when you file your tax return.

IRS review of your withholding.

Your withholding or any claim for 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

, later.

If the IRS determines that you have overstated your withholding or can’t claim a complete exemption from withholding, the IRS will issue a notice that specifies the withholding arrangement permitted for the employee (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 that the IRS determination was otherwise incorrect, you must submit a new Form W-4 and a written statement to support your claims made on Form W-4 that would decrease federal income tax withholding 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 haven’t responded or if your response isn’t 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 withholding specified in that letter.

If you later believe that you are entitled to claim exemption from withholding or otherwise adjust your withholding, 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 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 at IRS.gov. Enter

“withholding compliance questions”

in the search box.

Exemption From Withholding

If you claim exemption from withholding, your employer won’t 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 2021 only if both of the following situations apply.

  • For 2020, you had a right to a refund of all federal income tax withheld because you had no tax liability.

  • For 2021, you expect a refund of all federal income tax withheld because you expect to have no tax liability.

Use

Figure 1-A

to help you decide whether you can claim exemption from withholding. Don’t use Figure 1-A if you:

  • Are 65 or older,

  • Are blind,

  • Will itemize deductions on your 2021 return, or

  • Will claim any tax credits on your 2021 return.

These situations are discussed later.

Students.

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.

Example 1.

You are a high school student and expect to earn $2,500 from a summer job. You don’t expect to have any other income during the year, and your parents will be able to claim you as a dependent 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 2020 return. Using Figure 1-A, you find that you can claim exemption from withholding.

This is an Image: 15008e11.gif

Figure 1-A: Exemption From Withholding on Form W-4

Please click here for the text description of the image.

Example 2.

The facts are the same as in Example 1, except that you also have a savings account and expect to have $400 interest income during the year. Using Figure 1-A, you find that you can’t claim exemption from withholding because your unearned income will be more than $350 and your total income will be more than $1,100.

.This is an Image: caution.gifYou may have to file a tax return, even if you are exempt from withholding. See Pub. 501 to see whether you must file a return..

.This is an Image: pencil.gif Age 65 or older or blind. If you are 65 or older or blind, use

Worksheet 1-1

or

Worksheet 1-2

to help you decide whether you can claim exemption from withholding. Don’t use either worksheet if you will itemize deductions or claim tax credits on your 2021 return. Instead, see Itemizing deductions or claiming credits next..

Itemizing deductions or claiming credits.

If you had no tax liability for 2020, and you will:

  • Itemize deductions, or

  • Claim a tax credit,

use

Worksheet 2-1

(also, see

chapter 2

) to figure your 2021 expected tax liability. You can claim exemption from withholding only if your total expected tax liability (line 11c of the worksheet) is zero.

Claiming exemption from withholding.

To claim exemption, you must give your employer a Form W-4. Write “Exempt” on the form in the space below Step 4(c) and complete Steps 1(a), 1(b), and 5. Don’t complete any other steps.

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 2021 but you expect to owe income tax for 2022, you must file a new Form W-4 by December 1, 2021.

Your claim of exempt status may be reviewed by the IRS. See

IRS review of your withholding

, earlier.

An exemption is good for only 1 year.

You must give your employer a new Form W-4 by February 15 each year to continue your exemption.

Supplemental Wages

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 22% flat rate under certain circumstances as explained in the section on supplemental wages in Pub. 15.

Expense allowances.

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 don’t return the excess payments within a reasonable period of time.

Accountable plan.

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.

Nonaccountable plan.

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 Pub. 463, Travel, Entertainment, Gift, and Car Expenses.

Penalties

You may have to pay a penalty of $500 if both of the following apply.

  • You make statements on your Form W-4 that reduce the amount of tax withheld.

  • You have no reasonable basis for those statements 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 won’t result in one of these penalties.

Tips

The tips you receive while working on your job are considered part of your pay. You must include your tips on your tax return on the same line as your regular pay. However, tax isn’t withheld directly from tip income, as it is from your regular pay. Nevertheless, your employer will take into account the tips you report when figuring how much to withhold from your regular pay.

Reporting tips to your employer.

If you receive tips of $20 or more in a month while working for any one employer, you must report to your employer the total amount of tips you receive on the job during the month. The report is due by the 10th day of the following month.

If you have more than one job, make a separate report to each employer. Report only the tips you received while working for that employer, and only if they total $20 or more for the month.

How employer figures amount to withhold.

The tips you report to your employer are counted as part of your income for the month you report them. Your employer can figure your withholding in either of two ways.

  • By withholding at the regular rate on the sum of your pay plus your reported tips.

  • By withholding at the regular rate on your pay plus a percentage of your reported tips.

Not enough pay to cover taxes.

If your regular pay isn’t enough for your employer to withhold all the tax (including income tax and social security and Medicare taxes (or the equivalent railroad retirement tax)) due on your pay plus your tips, you can give your employer money to cover the shortage.

If you don’t give your employer money to cover the shortage, your employer first withholds as much Medicare tax and social security or railroad retirement tax as possible, up to the proper amount, and then withholds income tax up to the full amount of your pay. If not enough tax is withheld, you may have to pay estimated tax. When you file your return, you may also have to pay any Medicare and social security tax or railroad retirement tax your employer could not withhold.

Tips not reported to your employer.

On your tax return, you must report all the tips you receive during the year, even tips you don’t report to your employer (this includes the value of any noncash tips you received, such as tickets, passes, or other items of value). Make sure you are having enough tax withheld, or are paying enough estimated tax (see

chapter 2

), to cover all your tip income.

Allocated tips.

If you work in a large food or beverage establishment, your employer may have to report an allocated amount of tips on your Form W-2.

Your employer should not withhold income tax, Medicare tax, and social security or railroad retirement tax on the allocated amount. Withholding is based only on your pay plus your reported tips. Your employer should refund to you any incorrectly withheld tax.

More information.

For more information on the reporting and withholding rules for tip income and on tip allocation, see Pub. 531, Reporting Tip Income.

Taxable Fringe Benefits

The value of certain noncash fringe benefits you receive from your employer is considered part of your pay. Your employer must generally withhold income tax on these benefits from your regular pay.

Although the value of your personal use of an employer-provided car, truck, or other highway motor vehicle is taxable, your employer can choose not to withhold income tax on that amount. Your employer must notify you if this choice is made.

When benefits are considered paid.

Your employer can choose to treat a fringe benefit as paid by the pay period, by the quarter, or on some other basis as long as the benefit is considered paid at least once a year. Your employer can treat the benefit as being paid on one or more dates during the year, even if you get the entire benefit at one time.

Special rule.

Your employer can choose to treat a benefit provided during November or December as paid in the next year. Your employer must notify you if this rule is used.

Example.

Your employer considers the value of benefits paid from November 1, 2019, through October 31, 2020, as paid to you in 2020. To determine the total value of benefits paid to you in 2021, your employer will add the value of any benefits paid in November and December of 2020 to the value of any benefits paid in January through October of 2021.

Exceptions.

Your employer can’t choose when to withhold tax on the transfer of either real property or personal property of a kind normally held for investment (such as stock). Your employer must withhold tax on these benefits at the time of the transfer.

How withholding is figured.

Your employer can either add the value of a fringe benefit to your regular pay and figure income tax withholding on the total or withhold a flat 22% of the benefit’s value.

If the benefit’s actual value can’t be determined when it is paid or treated as paid, your employer can use a reasonable estimate. Your employer must determine the actual value of the benefit by January 31 of the next year. If the actual value is more than the estimate, your employer must pay the IRS any additional withholding tax required. Your employer has until April 1 of that next year to recover from you the additional income tax paid to the IRS for you.

How your employer reports your benefits.

Your employer must report on Form W-2 the total of the taxable fringe benefits paid or treated as paid to you during the year and the tax withheld for the benefits. These amounts can be shown either on the Form W-2 for your regular pay or on a separate Form W-2. If your employer provided you with a car, truck, or other motor vehicle and chose to treat all of your use of it as personal, its value must be either separately shown on Form W-2 or reported to you on a separate statement.

More information.

For information on fringe benefits, see Fringe Benefits under Employee Compensation in Pub. 525, Taxable and Nontaxable Income.

Sick Pay

Sick pay is a payment to you to replace your regular wages while you are temporarily absent from work due to sickness or personal injury. To qualify as sick pay, it must be paid under a plan to which your employer is a party.

If you receive sick pay from your employer or an agent of your employer, income tax must be withheld. An agent who does not pay regular wages to you may choose to withhold income tax at a flat rate.

However, if you receive sick pay from a third party who isn’t acting as an agent of your employer, income tax will be withheld only if you choose to have it withheld. See

Form W-4S

, later.

If you receive payments under a plan in which your employer does not participate (such as an accident or health plan where you paid all the premiums), the payments are not sick pay and are usually not taxable.

Union agreements.

If you receive sick pay under a collective bargaining agreement between your union and your employer, the agreement may determine the amount of income tax withholding. See your union representative or your employer for more information.

Form W-4S.

If you choose to have income tax withheld from sick pay paid by a third party, such as an insurance company, you must fill out Form W-4S. Its instructions contain a worksheet you can use to figure the amount you want withheld. They also explain restrictions that may apply.

Give the completed form to the payer of your sick pay. The payer must withhold according to your directions on the form.

Form W-4S remains in effect until you change or cancel it, or stop receiving payments. You can change your withholding by giving a new Form W-4S or a written notice to the payer of your sick pay.

Estimated tax.

If you don’t request withholding on Form W-4S, or if you don’t have enough tax withheld, you may have to pay estimated tax. If you don’t pay enough tax, either through estimated tax or withholding, or a combination of both, you may have to pay a penalty. See

chapter 2

.

Pensions and Annuities

Income tax will usually be withheld from your pension or annuity distributions unless you choose not to have it withheld. This rule applies to distributions from:

  • An IRA;

  • A life insurance company under an endowment, annuity, or life insurance contract;

  • A pension, annuity, or profit-sharing plan;

  • A stock bonus plan; and

  • Any other plan that defers the time you receive compensation.

The amount withheld depends on whether you receive payments spread out over more than 1 year (periodic payments), within 1 year (nonperiodic payments), or as an eligible rollover distribution (ERD). Income tax withholding from an ERD is mandatory. ERDs are discussed under

Eligible Rollover Distributions

, later.

Nontaxable part.

The part of your pension or annuity that is a return of your investment in your retirement plan (the amount you paid into the plan or its cost to you) isn’t taxable. Income tax won’t be withheld from the part of your pension or annuity that isn’t taxable. The tax withheld will be figured on, and can’t be more than, the taxable part.

For information about figuring the part of your pension or annuity that isn’t taxable, see Pub. 575, Pension and Annuity Income.

Periodic Payments

Withholding from periodic payments of a pension or annuity is figured similarly to withholding from certain salaries and wages. To tell the payer of your pension or annuity how much you want withheld, fill out Form W-4P or a similar form provided by the payer. 2021 Form W-4P has different entries and is completed differently from the 2021 Form W-4. Withholding on 2021 Form W-4P is figured under the same rules that were used in calculating withholding in 2020 for employees who have a 2019 (or prior year) Form W-4 in effect. Because the forms and lines on the 2021 Form W-4 and the 2021 Form W-4P are different this year, the rules discussed under

Salaries and Wages

, earlier, for completing the 2021 Form W-4 should not be used in completing the 2021 Form W-4P.

See the instructions for the 2021 Form W-4P and the following material for guidance in filling out your 2021 Form W-4P.

Withholding Allowances

The more allowances you claim on Form W-4P, 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.

  • Whether you will file as single, head of household, married filing jointly, or married filing separately.

  • Whether you have income from more than one source.

  • What credits you expect to claim for children and other dependents.

  • What other credits you expect to claim for the year.

  • What deductions, adjustments, and nonwage income (such as dividends or interest) you expect to have for the year.

If you are married (filing jointly), it also depends on whether your spouse also works or receives pension or annuity payments and claims any allowances on his or her own Form W-4P or withholding on his or her own Form W-4.

Form W-4P worksheets.

Form W-4P has worksheets to help you figure how many withholding allowances you can claim. The worksheets are for your own records. Don’t give them to the payer of your pension or annuity.

Complete only one set of Form W-4P worksheets, no matter how many sources of income 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 or receive pension or annuity payments and each must give Form W-4 or W-4P to your employers or the payers of your pension or annuity payments. Complete separate sets of worksheets only if you and your spouse will file separate returns.

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 periodic payments will match, as closely as possible, the amount of income tax you will owe at the end of the year.

Personal Allowances Worksheet

Use the Personal Allowances Worksheet on page 4 of Form W-4P to figure your withholding allowances based on all of the following that apply.

  • Filing status.

  • Child tax credit.

  • Credit for other dependents.

  • Other credits.

Filing Status (worksheet lines A, B, and C).

Single or married but filing separately from your spouse.

You can claim an allowance for yourself. If you expect to file as single or married filing separately on your 2021 tax return, enter “2” on line A of the worksheet.

Married filing jointly or qualifying widow(er).

You can claim an allowance if you will file as married filing jointly or qualifying widow(er). If you expect to file as married filing jointly or qualifying widow(er) on your 2021 tax return, enter “1” on line B of the worksheet.

Head of household.

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:

  • Was the main home for all of 2021 of your parent whom you can claim as your dependent, or

  • You lived in for more than half the year with your qualifying child or any other person whom you can claim as your dependent.

For more information, see Pub. 501.

If you expect to file as head of household on your 2021 tax return, enter “1” on line C of the worksheet. In addition, see line 12 of

Worksheet 1-6A

for an additional amount to enter on line G of the Personal Allowances Worksheet.

Child tax credit (worksheet line D).

If your total income will be less than $72,351 ($105,051 if married filing jointly), enter “4” on line D for each eligible child.

If your total income will be from $72,351 to $181,950 ($105,051 and $351,400 if married filing jointly), enter “2” on line D for each eligible child.

If your total income will be from $181,951 to $200,000 ($351,401 and $400,000 if married filing jointly), enter “1” on line D for each eligible child.

If your total income is higher than $200,000 ($400,000 if married filing jointly), enter “-0-” on line D.

To see if your child is an eligible child for the child tax credit, see Who Qualifies as Your Dependent in the Form 1040 and 1040-SR instructions.

For more information about the child tax credit, see the Instructions for Forms 1040 and 1040-SR.

Instead of using line D, you can choose to take the child tax credit into account on line 1 of Worksheet 1-6A.

Credit for other dependents (worksheet line E).

If your total income will be less than $72,351 ($105,051 if married filing jointly), enter “1” on line E for each eligible dependent.

If your total income will be from $72,351 to $181,950 ($105,051 and $351,400 if married filing jointly), enter “1” on line E for every two dependents (for example, you would enter -0- for one dependent, “1” if you have two or three dependents, or “2” if you have four dependents).

If your total income will be higher than $181,950 ($351,400 if married filing jointly), enter -0- on line E.

Instead of using line E, you can choose to take the credit for other dependents into account on line 2 of Worksheet 1-6A.

To see who you can claim as a dependent for the credit for other dependents, see Who Qualifies as Your Dependent in the Form 1040 and 1040-SR instructions. A dependent for purposes of the credit for other dependents also includes an eligible child who had an ITIN but not an SSN by the due date of your 2021 return (including extensions).

Other credits (worksheet line F).

Use

Worksheet 1-6A

to figure the amount of other credits to enter on line F. In addition to the child tax credit and credit for other dependents, you can take your other credits into account when figuring additional withholding allowances for 2021. See

Table 1-2

.

Head of household filers can also use

Worksheet 1-6A

to further reduce withholding.

Total personal allowances (worksheet line G).

Add lines A through F and enter the total on line G. If you don’t use either of the worksheets on page 5 of Form W-4P, enter the number from line G on line 2 of Form W-4P.

Deductions, Adjustments, and Additional Income Worksheet

Use the Form W-4P Deductions, Adjustments, and Additional Income Worksheet if you plan to itemize your deductions or claim adjustments to the income on your 2021 tax return and you want to reduce your withholding. Also, use this worksheet to figure out how much to increase the tax withheld from your paycheck if you have a large amount of nonwage income, such as interest or dividends. Complete this worksheet when you have changes to those items to see if you need to change your withholding.

Use the amount of each item you reasonably can expect to show on your return. However, don’t use more than:

  • The amount shown for that item on your 2020 return (or your 2019 return if you haven’t yet filed your 2020 return), plus

  • 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 has happened or will happen during 2020 or 2021.

Don’t include any amount shown on your last tax return that has been disallowed by the IRS.

Not itemizing deductions.

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.

Itemized deductions (worksheet line 1).

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 2021. You normally claim these deductions on Schedule A (Form 1040). For a full list of itemized deductions, see the 2020 Instructions for Schedule A (Form 1040) and

What’s New for 2021

, earlier.

  1. Medical and dental expenses that are more than 7.5% of your 2021 adjusted gross income (AGI) (defined under

    Expected AGI

    , later).

  2. State and local income or property taxes (up to $10,000).

  3. Deductible home mortgage interest.

  4. Investment interest up to net investment income.

  5. Charitable contributions.

  6. Casualty and theft losses attributable to a federally declared disaster that are more than $100 and 10% of your AGI.

Adjustments to income (worksheet line 4).

Enter your estimated total adjustments to income on line 4 of the Deductions, Adjustments, and Additional Income Worksheet.

You can take the following adjustments to income into account when figuring additional withholding allowances for 2021.

  • Net losses from Schedules C, D, E, and F of Form 1040 or 1040-SR and from Part II of Form 4797, line 18b.

  • Net operating loss carryovers.

  • Certain business expenses of reservists, performing artists, and fee-based government officials.

  • Health savings account or medical savings account deduction.

  • Certain moving expenses for members of the Armed Forces on active duty.

  • Deduction for self-employment tax.

  • Deduction for contributions to self-employed SEP, and qualified SIMPLE plans.

  • Self-employed health insurance deduction.

  • Penalty on early withdrawal of savings.

  • IRA deduction.

  • Student loan interest deduction.

  • Jury duty pay given to your employer.

  • Reforestation amortization and expenses.

  • Deductible expenses related to income reported on Schedule 1 (Form 1040), line 8k, from the rental of personal property engaged in for profit.

  • Repayment of certain supplemental unemployment benefits.

  • Contributions to pension plans.

  • Contributions by certain chaplains to plans.

  • Attorney fees and court costs for certain unlawful discrimination claims.

  • Attorney fees and court costs for certain whistleblower awards.

  • Estimated amount of decrease in tax attributable to income averaging using Schedule J (Form 1040).

  • Educator expenses.

Nonwage income (worksheet line 6).

Enter on line 6 your estimated total nonwage income (other than tax-exempt income). Nonwage income includes interest, dividends, net rental income, unemployment compensation, 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

, earlier.

Net deductions and adjustments (worksheet line 8).

Divide the amount on line 7 by $4,300, drop any fraction, and enter the amount on line 8. If it’s a negative amount, enter it in parentheses.

Example.

If line 7 is $5,200, $5,200 ÷ $4,300 = 1.2. Drop the fraction (0.2) and enter “1” on line 8.

Multiple Pensions/More-Than-One-Income Worksheet

Complete the Multiple Pensions/More-Than-One-Income Worksheet on page 5 of Form W-4P if you (and your spouse if married filing jointly) have more than one source of income subject to withholding (for example, more than one pension, or a pension and a job, or if you have a pension and your spouse works).

Reducing your allowances (worksheet lines 1–3).

On line 1 of the worksheet, enter the number from line G of the Personal Allowances Worksheet (or line 10 of the Deductions, Adjustments, and Additional Income Worksheet, if used). Using Table 1 in the Multiple Pensions/More-Than-One-Income Worksheet, find the number that applies to the lowest paying pension or job and enter it on line 2. If you are married filing jointly and the amount from the highest paying pension or job is $75,000 or less and the combined amounts for you and your spouse are $107,000 or less, don’t enter more than “7.”

If line 1 is more than or equal to line 2, subtract line 2 from line 1. Enter the result on line 3 (if zero or less, enter -0-) and on Form W-4P, line 2. Don’t use the rest of the worksheet.

If line 1 is less than line 2, enter “-0-” on Form W-4P, line 2. Then, complete lines 4 through 9 of the worksheet to figure the additional withholding needed to avoid underwithholding.

Other amounts owed.

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.

Note.

Use Form W-4, not Form W-4P, if you receive any of the following.

  • Military retirement pay.

  • Payments from certain nonqualified deferred compensation plans. These are employer plans that pay part of your compensation at a later time, but are not tax-qualified deferred compensation plans. See Nonqualified Deferred Compensation and Section 457 Plans in Pub. 957, Reporting Back Pay and Special Wage Payments to the Social Security Administration.

Withholding rules.

The withholding rules for pensions and annuities differ from those for salaries and wages in the following ways.

  • If you don’t fill out a withholding certificate, tax will be withheld as if you were married and claiming three withholding allowances.

  • You can choose not to have tax withheld, regardless of how much tax you owed last year or expect to owe this year. You don’t have to qualify for exemption. See

    Choosing Not To Have Income Tax Withheld

    , later.

  • If you don’t give the payer your SSN in the required manner or the IRS notifies the payer before any payment or distribution is made that you gave an incorrect SSN, tax will be withheld as if you were single and were claiming no withholding allowances.

Effective date of withholding certificate.

If you give your withholding certificate (Form W-4P or a similar form) to the payer on or before the date your payments start, it will be put into effect by the first payment made more than 30 days after you submit the certificate.

If you give the payer your certificate after your payments start, it will be put into effect with the first payment, which is at least 30 days after you submit it. However, the payer can elect to put it into effect earlier.

Nonperiodic Payments

Tax will be withheld at a flat 10% rate on any nonperiodic payments you receive, unless you tell the payer not to withhold.

Use Form W-4P, line 3, to specify that an additional dollar amount be withheld. You can also use Form W-4P, line 1, to choose not to have tax withheld. If you want to revoke a choice not to have tax withheld, see

Choosing Not To Have Income Tax Withheld

, later.

.This is an Image: caution.gifYou may need to use Form W-4P to ask for additional withholding. If you don’t have enough tax withheld, you may need to pay estimated tax, as explained in

chapter 2

. .

Eligible Rollover Distributions

A distribution you receive that is eligible to be rolled over tax free into a qualified retirement or annuity plan is called an eligible rollover distribution (ERD). This is the taxable part of any distribution from a qualified pension plan or tax-sheltered annuity that isn’t any of the following.

  1. A required minimum distribution.

  2. One of a series of substantially equal periodic pension or annuity payments made over:

    1. Your life (or your life expectancy) or the joint lives of you and your beneficiary (or your life expectancies), or

    2. A specified period of 10 or more years.

  3. A hardship distribution.

The payer of a distribution must withhold at a flat 20% rate on any part of an ERD that is distributed rather than rolled over directly to another qualified plan. Withholding on these distributions is mandatory. However, no withholding is required on any part rolled over directly to another plan.

Choosing Not To Have Income Tax Withheld

For payments other than ERDs, you can choose not to have income tax withheld. The payer will tell you how to make this choice. If you use Form W-4P, check the box on line 1 to choose not to have withholding. This choice will remain in effect until you decide you want withholding and inform the payer. See

Revoking a choice not to have tax withheld

, later.

The payer must withhold if either of the following applies.

  • You don’t give the payer your SSN in the required manner.

  • The IRS notifies the payer, before any payment or distribution is made, that you gave it an incorrect SSN.

If you don’t have any income tax withheld from your pension or annuity, or if you don’t have enough withheld, you may have to pay estimated tax. See

chapter 2

.

If you don’t pay enough tax, either through estimated tax or withholding, or a combination of both, you may have to pay a penalty.

Payments delivered outside the United States.

You must generally have tax withheld from pension or annuity benefits delivered outside the United States. However, if you are a U.S. citizen or resident alien, you can choose not to have tax withheld if you give the payer of the benefits a home address in the United States or in a U.S. possession. The payer must withhold tax if you provide a U.S. address for a nominee, trustee, or agent to whom the benefits are to be delivered, but don’t provide your own home address in the United States or in a U.S. possession.

Notice required of payer.

The payer of your pension or annuity must send you a notice telling you about your right to choose not to have tax withheld.

Generally, the payer won’t send a notice to you if it is reasonable to believe that the entire amount you will be paid isn’t taxable.

Revoking a choice not to have tax withheld.

The payer of your pension or annuity will tell you how to revoke your choice not to have income tax withheld from periodic or nonperiodic payments. If you use Form W-4P to revoke the choice, enter “Revoked” by the checkbox on line 1 of the form. This will instruct the payer to withhold as if you were married and claiming three allowances. However, you can tell the payer exactly how much to withhold by completing line 2 of the form for periodic payments or line 3 for nonperiodic payments.

Gambling Winnings

Income tax is withheld at a flat 24% rate from certain kinds of gambling winnings.

Gambling winnings of more than $5,000 from the following sources are subject to income tax withholding.

  • Any sweepstakes; wagering pool, including payments made to winners of poker tournaments; or lottery.

  • Any other wager if the proceeds are at least 300 times the amount of the bet.

It does not matter whether your winnings are paid in cash, in property, or as an annuity. Winnings not paid in cash are taken into account at their fair market value.

Exception.

Gambling winnings from bingo, keno, and slot machines are generally not subject to income tax withholding. However, you may need to provide the payer with an SSN to avoid withholding. See

Backup withholding on gambling winnings

, later. If you receive gambling winnings not subject to withholding, you may need to pay estimated tax. See

chapter 2

.

If you don’t pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty.

Form W-2G.

If a payer withholds income tax from your gambling winnings, you should receive a Form W-2G, Certain Gambling Winnings, showing the amount you won and the amount withheld.

Report the tax withheld on your 2021 Form 1040 or 1040-SR, along with all other federal income tax withheld, as shown on Forms W-2 and 1099.

Information to give payer.

If the payer asks, you must give the payer all the following information.

  • Your name, address, and SSN.

  • Whether you made identical wagers (explained below).

  • Whether someone else is entitled to any part of the winnings subject to withholding. If so, you must complete Form 5754, Statement by Person(s) Receiving Gambling Winnings, and return it to the payer. The payer will use it to prepare a Form W-2G for each of the winners.

Identical wagers.

You may have to give the payer a statement of the amount of your winnings, if any, from identical wagers. If this statement is required, the payer will ask you for it. You provide this statement by signing Form W-2G or, if required, Form 5754.

Identical wagers include two bets placed in a pari-mutuel pool on one horse to win a particular race. However, the bets are not identical if one bet is “to win” and one bet is “to place.” In addition, they are not identical if the bets were placed in different pari-mutuel pools. For example, a bet in a pool conducted by the racetrack and a bet in a separate pool conducted by an offtrack betting establishment in which the bets are not pooled with those placed at the track are not identical wagers.

Backup withholding on gambling winnings.

If you have any kind of gambling winnings and don’t give the payer your SSN, the payer may have to withhold income tax at a flat 24% rate. This rule also applies to winnings of at least $1,200 from bingo or slot machines or $1,500 from keno, and to certain other gambling winnings of at least $600.

Unemployment Compensation

You can choose to have income tax withheld from unemployment compensation. To make this choice, fill out Form W-4V (or a similar form provided by the payer) and give it to the payer.

All unemployment compensation is taxable. So, if you don’t have income tax withheld, you may have to pay estimated tax. See

chapter 2

.

If you don’t pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty.

Form 1099-G.

If you receive $10 or more in unemployment compensation, you will receive a Form 1099-G, Certain Government Payments. Box 1 will show the amount of unemployment compensation you got for the year. Box 4 will show the amount of federal income tax withheld, if any.

Federal Payments

You can choose to have income tax withheld from certain federal payments you receive. These payments are the following.

  1. Social security benefits.

  2. Tier 1 railroad retirement benefits.

  3. Commodity credit corporation loans you choose to include in your gross income.

  4. Payments under the Agricultural Act of 1949 (7 U.S.C. 1421 et seq.), as amended, or title II of the Disaster Assistance Act of 1988 that are treated as insurance proceeds and that you received because:

    1. Your crops were destroyed or damaged by drought, flood, or any other natural disaster; or

    2. You were unable to plant crops because of a natural disaster described
      in (a).

  5. Dividends and other distributions from Alaska Native Corporations to its shareholders.

  6. Any other payment under federal law as determined by the Secretary.

To make this choice, fill out Form W-4V (or a similar form provided by the payer) and give it to the payer.

If you don’t choose to have income tax withheld, you may have to pay estimated tax. See

chapter 2

.

If you don’t pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty.

More information.

For more information about the tax treatment of social security and railroad retirement benefits, seePub. 915, Social Security and Equivalent Railroad Retirement Benefits. Get Pub. 225, Farmer’s Tax Guide, for information about the tax treatment of commodity credit corporation loans or crop disaster payments.

Payment to shareholders of Alaska Native Corporations (ANCs).

If you are a shareholder of an ANC, you can request to have income tax withheld from dividends and other distributions you receive from the ANC. To make this request, fill out Form W-4V (or a similar form provided by the payer) and give it to the payer. A request for withholding isn’t effective until the ANC indicates in writing that it accepts the request or begins withholding. Contact the payer if it isn’t clear that the payer has accepted your Form W-4V.

If you don’t choose to have income tax withheld, or the ANC doesn’t accept your request, you may have to pay estimated tax. See

chapter 2

.

If you don’t pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty.

Backup Withholding

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 are generally not subject to withholding. However, “backup” withholding is required in certain situations.

Payments subject to backup withholding.

Backup withholding can apply to most kinds of payments that are reported on Form 1099. These include:

  • Interest payments (Form 1099-INT);

  • Government payments (Form 1099-G);

  • Dividends (Form 1099-DIV);

  • Patronage dividends, but only if at least half the payment is in money (Form 1099-PATR);

  • Rents, profits, or other gains (Form 1099-MISC);

  • Commissions, fees, or other payments for work you do as an independent contractor (Form 1099-MISC);

  • Payments by brokers (Form 1099-B);

  • Payments by fishing boat operators, but only the part that is in money and that represents a share of the proceeds of the catch (Form 1099-MISC); and

  • Royalty payments (Form 1099-MISC).

Backup withholding may also apply to gambling winnings. See

Backup withholding on gambling winnings

under Gambling Winnings, earlier.

Payments not subject to backup withholding.

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.

  • The amount you receive from any one payer is $600 or more.

  • The payer had to give you a Form 1099 last year.

  • The payer made payments to you last year that were subject to backup withholding.

Form 1099 and backup withholding are generally not required for a payment of less than $10.

Withholding rules.

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 must also 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 24% rate in the following situations.

  • You don’t give the payer your TIN in the required manner.

  • The IRS notifies the payer that the TIN you gave is incorrect.

  • You are required, but fail, to certify that you are not subject to backup withholding.

  • The IRS notifies the payer to start withholding on interest or dividends because you have underreported interest or dividends on your income tax return. The IRS will do this only after it has mailed you four notices over at least a 210-day period.

Taxpayer identification number (TIN).

Your TIN is one of the following three numbers.

  • An SSN.

  • An employer identification number (EIN).

  • An IRS individual taxpayer identification number (ITIN). Aliens who don’t have an SSN and are not eligible to get one should get an ITIN. Use Form W-7, Application for IRS Individual Taxpayer Identification Number, to apply for an ITIN.

An ITIN is for federal 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, see Pub. 1915, Understanding Your IRS Individual Taxpayer Identification Number.

.This is an Image: caution.gifIf you were assigned an ITIN before January 1, 2013, or if you have an ITIN that you haven’t included on a tax return in the last 3 consecutive years, you may need to renew it. For more information, see the Instructions for Form W-7. .

How to prevent or stop backup withholding.

If you have been notified by a payer that the TIN you gave is incorrect, you can usually 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.

Underreported interest or dividends.

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.

  • No underreporting occurred.

  • You have a bona fide dispute with the IRS about whether an underreporting occurred.

  • Backup withholding will cause or is causing an undue hardship and it is unlikely that you will underreport interest and dividends in the future.

  • You have corrected the underreporting by filing an original return if you didn’t previously file one, or by filing an amended return, and by paying all taxes, penalties, and interest due for any underreported interest or dividend payments.

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.

Penalties.

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.

Worksheets for Chapter 1

Use the following worksheets to figure your correct withholding and adjustments.

Use… To…

Worksheet 1-1

and

Worksheet 1-2

Exemption From Withholding for Persons/Dependents Age 65 or Older or Blind

Figure your total expected income for 2021 to determine if you are exempt from withholding. Use Worksheet 1-1 if, in 2020, you had a right to a refund of all federal income tax withheld because of no tax liability. Use Worksheet 1-2 if you are a dependent for 2021 and, for 2020, you had a refund of all federal income tax withheld because of no tax liability.

Worksheet 1-3

Projected Tax for 2020

Project the taxable income you will have for 2021 and figure the amount of tax you will have to pay on that income.

Worksheet 1-4

Tax Computation Worksheets for 2021

Figure the amount of tax on your projected taxable income.

Worksheet 1-5

Projected Withholding for 2021

Project the amount of federal income tax that you will have withheld in 2021, compare your projected withholding with your projected tax, and determine whether the amount withheld each payday should be adjusted.

Worksheet 1-6

Tax Credits for 2021 Form W-4

Figure any extra amount to include in Step 3 of Form W-4 to account for your projected tax credits that are not otherwise taken into consideration.

Worksheet 1-6A

Converting Credits to Withholding Allowances for 2021 Form W-4P

Figure the amount to enter on line F of the Personal Allowances Worksheet to account for your projected tax credits that are not otherwise taken into consideration.

 

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

Use this worksheet only if, for 2020, 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 1-2 instead.

1. Check the boxes below that apply to you.
  65 or older □ Blind □  
2. Check the boxes below that apply to your spouse’s standard deduction.*
  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 2021 total income will be no more than:
Single   1   $14,250
    2   15,950
Head of   1   $20,500
household   2   22,200
Married filing   1   $13,900
separately for   2   15,250
both 2020 and   3   16,600
2021   4   17,950
Other married   1   $26,450**
status   2   27,800**
    3   29,150**
    4   30,500**
** Include both spouses’ income whether you will file separately or jointly.
Qualifying   1   $26,450
widow(er)   2   27,800
You can’t claim exemption from withholding if your total income will be more than the amount shown for your filing status.
* You can check the appropriate boxes for your spouse if your filing status is married filing jointly. You can check the appropriate boxes for your spouse if your filing status is married filing separately and your spouse had no income, isn’t filing a return, and can’t be claimed as a dependent on another person’s return.

Worksheet 1-2. Exemption From Withholding for Dependents Age 65 or Older or Blind

Use this worksheet only if, for 2021, you are a dependent and if, for 2020, 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 $350 1. _____
2. Minimum amount 2. $ 1,100
3. Compare lines 1 and 2. Enter the larger amount 3. _____
4. Limit 4. 12,550
5. Compare lines 3 and 4. Enter the smaller amount 5. _____
6. Enter the appropriate amount from the following table 6. _____
  Single        
  Either 65 or older or blind $1,700      
  Both 65 or older and blind 3,400      
  Married filing separately        
  Either 65 or older or blind 1,350      
  Both 65 or older and blind 2,700      
7. Add lines 5 and 6. Enter the result 7. _____
8. Enter your total expected income 8. _____
You can claim exemption from withholding if line 7 is equal to or more than line 8. You can’t claim exemption from withholding if line 8 is more than line 7.

Worksheet 1-3. Projected Tax for 2021

Use this worksheet to figure your projected tax for 2021. Note. Enter combined amounts if married filing jointly.
1. Enter amount of adjusted gross income (AGI) you expect in 2021. (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 for 2021, 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:      
  Don’t plan to itemize deductions on Schedule A (Form 1040), use Worksheet 2-4 to figure your expected standard deduction. Enter that amount plus up to $300 ($600 if married filing jointly) for charitable contributions made by cash or check.    
  Plan to itemize deductions, enter the amount of your estimated itemized deductions.    
  Qualify for the deduction for qualified business income, enter the estimated amount of the deduction you are allowed on your qualified business income from a qualified trade or business. Add this amount to your expected standard deduction or estimated itemized deductions and enter the total here 2.  
3. Expected taxable income. Subtract line 2 from line 1. (If zero or less, enter -0- here and on line 4,
then go to line 5.)
3.  
4. If the amount on line 1:      
  Doesn’t include a net capital gain or qualified dividends and you didn’t exclude foreign earned income or exclude or deduct foreign housing in arriving at the amount on line 1, use Worksheet 1-4 to figure the tax to enter here.    
  Includes a net capital gain or qualified dividends, use Worksheet 2-5 to figure the tax to enter here.    
  Was figured by excluding foreign earned income or excluding or deducting foreign housing, use
Worksheet 2-6 to figure the tax to enter here
4.  
5. Enter any expected additional taxes from an election to report your child’s interest and dividends, lump-sum distributions (Form 4972), and alternative minimum tax 5.  
6. Add lines 4 and 5 6.  
7. Enter the amount of any expected tax credits. See

Table 1-2

7.  
8. Subtract line 7 from line 6 (if zero or less, enter -0-) 8.  
9. 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 9.) 9.  
10. Enter the total of any other expected taxes* 10.  
11. Projected tax for 2021. Add lines 8 through 10. Enter the total here and on Worksheet 1-5, line 1 11.  
* Use the Instructions for the 2020 Form 1040 and 1040-SR to determine if you expect to owe, for 2021, any of the taxes that would have been entered on your 2020 Schedule 2 (Form 1040), lines 5, 6, 7 (a or b), and 8.

Worksheet 1-4. Tax Computation Worksheets for 2021

Note. If you are figuring the tax on an amount from Worksheet 2-5 (line 1 or 14), or Worksheet 2-6 (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 1-3, line 4, if you expect your filing status for 2021 to be Single.
Expected Taxable Income (a)
Enter amount from
Worksheet 1-3,
line 3*
(b)
Multiplication amount
(c)
Multiply
(a) by (b)
(d)
Subtraction amount
(e)
Subtract (d) from (c). Enter the result here and on Worksheet 1-3, line 4*
If Worksheet 1-3,
line 3* is —
Over But not
over
$0 $9,950   × 10% (0.10)   $0  
9,950 40,525   × 12% (0.12)   199.00  
40,525 86,375   × 22% (0.22)   4,251.50  
86,375 164,925   × 24% (0.24)   5,979.00  
164,925 209,425   × 32% (0.32)   19,173.00  
209,425 523,600   × 35% (0.35)   25,455.75  
523,600 – – – – –   × 37% (0.37)   35,927.75  
* If you are using Worksheet 2-5, 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 2-6, 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 1-3, line 4, if you expect your filing status for 2021 to be Head of Household.
Expected Taxable Income (a)
Enter amount from
Worksheet 1-3,
line 3*
(b)
Multiplication amount
(c)
Multiply
(a) by (b)
(d)
Subtraction amount
(e)
Subtract (d) from (c). Enter the result here and on Worksheet 1-3, line 4*
If Worksheet 1-3,
line 3* is —
Over But not
over
$0 $14,200   × 10% (0.10)   $0  
14,200 54,200   × 12% (0.12)   284.00  
54,200 86,350   × 22% (0.22)   5,704.00  
86,350 164,900   × 24% (0.24)   7,431.00  
164,900 209,400   × 32% (0.32)   20,623.00  
209,400 523,600   × 35% (0.35)   26,905.00  
523,600 – – – – –   × 37% (0.37)   37,377.00  
* If you are using Worksheet 2-5, 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 2-6, 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.

Tax Computation Worksheet for 2021 (Continued)

c. Married Filing Jointly or Qualifying Widow(er). Use this worksheet to figure the amount to enter on Worksheet 1-3, line 4, if you expect your filing status for 2021 to be Married Filing Jointly or Qualifying Widow(er).
Expected Taxable Income (a)
Enter amount from
Worksheet 1-3,
line 3*
(b)
Multiplication amount
(c)
Multiply
(a) by (b)
(d)
Subtraction amount
(e)
Subtract (d) from (c). Enter the result here and on Worksheet 1-3, line 4*
If Worksheet 1-3,
line 3* is —
Over But not
over
$0 $19,900   × 10% (0.10)   $0  
19,900 81,050   × 12% (0.12)   398.00  
81,050 172,750   × 22% (0.22)   8,503.00  
172,750 329,850   × 24% (0.24)   11,958.00  
329,850 418,850   × 32% (0.32)   38,346.00  
418,850 628,300   × 35% (0.35)   50,911.50  
628,300 – – – – –   × 37% (0.37)   63,477.50  
* If you are using Worksheet 2-5, 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 2-6, 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 1-3, line 4, if you expect your filing status for 2021 to be Married Filing Separately.
Expected Taxable Income (a)
Enter amount from
Worksheet 1-3,
line 3*
(b)
Multiplication amount
(c)
Multiply
(a) by (b)
(d)
Subtraction amount
(e)
Subtract (d) from (c). Enter the result here and on Worksheet 1-3, line 4*
If Worksheet 1-3,
line 3* is —
Over But not
over
$0 $9,950   × 10% (0.10)   $0  
9,950 40,525   × 12% (0.12)   199.00  
40,525 86,375   × 22% (0.22)   4,251.50  
86,375 164,925   × 24% (0.24)   5,979.00  
164,925 209,425   × 32% (0.32)   19,173.00  
209,425 314,150   × 35% (0.35)   25,455.75  
314,150 – – – – –   × 37% (0.37)   31,738.75  
* If you are using Worksheet 2-5, 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 2-6, 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.

Worksheet 1-5. Projected Withholding for 2021

Use this worksheet to figure the amount of your projected withholding for 2021, compare it to your projected tax for 2021, and, if necessary, figure any adjustment to the amount you have withheld each payday.

Note. If married filing jointly, enter combined amounts.

1. Enter your projected tax for 2021 from Worksheet 1-3, line 13 1. _____
2. Enter your total federal income tax withheld to date in 2021 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 2021.    
  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 2021 4. _____
5. Compare the amounts on lines 1 and 4.    
    • If line 1 is more than line 4, subtract line 4 from line 1. You need to increase your withholding. Enter the result here and go to line 6.    
    • If line 4 is more than line 1, subtract line 1 from line 4. You may want to decrease your withholding. Enter the result here and go to line 6. 5. _____
6. Divide line 5 by the number of paydays (or other withholding events) remaining in 2021 and enter the result. This is the additional amount you should use to either increase or decrease the amount you have withheld from each remaining payday (or other withholding event). Follow the instructions for line 6 for your situation for completing a 2021 Form W-4. The instructions are different if your withholding so far this year was based on a 2019 (or earlier) Form W-4 or a 2021 Form W-4 6. _____

Instructions for line 6—If your withholding to date was figured based on a 2019 (or earlier) Form W-4.

Use the following instructions to increase your withholding.

How do you increase your withholding? Follow these steps to increase your withholding by completing a 2021 Form W-4.
Step 1:
  • If your filing status was “Single” or “Married, but withhold at higher Single rate,” check “Single.”

  • If your filing status was “Married,” check “Married filing jointly.”

Note. Head of household filing status was not a choice on the 2019 (or earlier) Form(s) W-4.

Step 4(a):
  • If your filing status was “Single” or “Married, but withhold at higher Single rate,” enter $8,600 (the equivalent of 2 allowances) on Step 4(a).

  • If your filing status was “Married,” enter $12,900 (the equivalent of 3 allowances on Step 4(a).

Step 4(b):
  • If there was an entry on line 5 (number of allowances), multiply each claimed allowance by $4,300 and enter the result on Step 4(b).

Step 4(c):
  • If there is an amount on line 6, add it to the amount on line 6 of Worksheet 1-5 above, and enter the result on Step 4(c).

Instructions for line 6—If your withholding to date was figured based on a 2019 (or earlier) Form W-4.

Use the following instructions to decrease your withholding.

How do you decrease your withholding? Follow these steps to decrease your withholding by completing a 2021 Form W-4.
Step 1:
  • If your filing status was “Single” or “Married, but withhold at higher Single rate,” check “Single.”

  • If your filing status was “Married,” check “Married filing jointly.”

Note. Head of household filing status was not a choice on the 2019 (or earlier) Form(s) W-4.

Step 3: Multiply the amount on line 6 of Worksheet 1-5 by the number of paydays in 2021 and enter this amount on Step 3.
Step 4(a):
  • If your filing status was “Single” or “Married, but withhold at higher Single rate,” enter $8,600 (the equivalent of 2 allowances) on Step 4(a).

  • If your filing status was “Married,” enter $12,900 (the equivalent of 3 allowances) on Step 4(a).

Step 4(b):
  • If there was an entry on line 5 (number of allowances), multiply each claimed allowance by $4,300 and enter the result on Step 4(b).

Step 4(c):
  • If there was an amount on line 6, add it to the amount on Step 4(c).

Instructions for line 6—If your withholding to date was figured based on a 2021 Form W-4.

Use the following instructions to either increase or decrease your withholding.

How do you increase your withholding? Follow these steps to increase your withholding by completing a 2021 Form W-4.
 
  • Complete your new 2021 Form W-4 through Step 4(b) in the same way you completed your previous Form W-4.

  • Add the amount, if any, on Step 4(c) of your previous Form W-4 to the amount on line 6 of Worksheet 1-5 above and enter the result on Step 4(c) of your new Form W-4.

How do you decrease your withholding?
 
  • Complete Steps 1, 2(c), 4(a), 4(b), and 4(c) in the same way as you completed your previous Form W-4.

  • Add the amount, if any, on Step 3 of your previous Form W-4 to the product of line 6 of Worksheet 1-5 multiplied by the total number of paydays in 2021 and enter the result on Step 3 of your new Form W-4.

.This is an Image: caution.gifIf you make a mid-year change to your withholding, you should complete and give to your employer a new Form W-4 in January. The later in the year you change your Form W-4, the more important it is that you submit a new form the following January..

Worksheet 1-6. Tax Credits for 2021 Form W-4

Use this worksheet to figure any extra amount to enter in Step 3 of Form W-4. For more information on these credits, see

Tax Credits

, earlier.
Caution. The child tax credit and the credit for other dependents are already figured in Step 3 of Form W-4.

Enter the projected amount for each credit you expect to take (other than the child tax credit or credit for other dependents).      
1. Credit for the elderly or the disabled 1.  
2. Credit for child and dependent care expenses 2.  
3. Education credits 3.  
4. Adoption credit 4.  
5. Foreign tax credit 5.  
6. Retirement savings contributions credit 6.  
7. Earned income credit 7.  
8. Premium tax credit 8.  
9. Other credits (see

Table 1-2

)

9.  
10. Add lines 1 through 9. This is your total estimated tax credits. Include this amount in the total entered on Form W-4, Step 3 10.  

Worksheet 1-6A. Converting Credits to Withholding Allowances for 2021 Form W-4P

Use this worksheet to figure the amount to enter on line F of the Personal Allowances Worksheet in the 2021 Form W-4P.
Caution. If you enter an amount on line 1, enter -0- on line D of the Form W-4P Personal Allowances Worksheet. If you enter an amount on line 2, enter -0- on line E of the Form W-4P Personal Allowances Worksheet.
For lines 1 through 11, enter the projected amount for each credit you expect to take.      
1. Child tax credit (including the additional child tax credit (see Caution above) 1.  
2. Credit for other dependents (see Caution above) 2.  
3. Credit for the elderly or the disabled 3.  
4. Credit for child and dependent care expenses 4.  
5. Education credits 5.  
6. Adoption credit 6.  
7. Foreign tax credit 7.  
8. Retirement savings contributions credit 8.  
9. Earned income credit 9.  
10. Premium tax credit 10.  
11. Other credits (see

Table 1-2

)

11.  
12. Head of household adjustment. If you are filing as head of household and your adjusted gross income is:

  • $32,750 or less, enter $185

  • $32,751 to $72,400, enter $300

  • $72,401 or higher, enter $1,800

12.  
13. Add lines 1 through 12. This is your total estimated tax credits 13.  
14. 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 14 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 $45,000 10.0   $0 $33,000 10.0      
  45,001 106,000 8.3   33,001 73,000 8.3      
  106,001 198,000 4.5   73,001 105,000 4.5      
  198,001 365,000 4.2   105,001 186,000 4.2      
  365,001 450,000 3.1   186,001 230,000 3.1      
  450,001 670,000 2.9   230,001 545,000 2.9      
  670,001 and over   2.7   545,001 and over   2.7      
                         
  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 $22,500 10.0   $0 $22,500 10.0      
  22,501 53,000 8.3   22,501 53,000 8.3      
  53,001 99,000 4.5   53,001 99,000 4.5      
  99,001 182,500 4.2   99,001 182,500 4.2      
  182,501 225,000 3.1   182,501 225,000 3.1      
  225,001 545,000 2.9   225,001 335,000 2.9      
  545,001 and over   2.7   335,001 and over   2.7   14.  
15. Multiply line 13 by line 14 15.  
16. Divide line 15 by $4,300. Drop any fraction. Enter the result here and on line F of the Personal Allowances Worksheet 16.  

2. Estimated Tax for 2021

Introduction

Estimated tax is the method used to pay tax on income that isn’t subject to withholding. This includes income from self-employment, interest, dividends, rent, gains from the sale of assets, prizes, and awards. You may also have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income isn’t enough.

Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. If you don’t pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. If you don’t pay enough by the due date of each payment period (see

When To Pay Estimated Tax

, later), you may be charged a penalty even if you are due a refund when you file your tax return. For information on when the penalty applies, see the Instructions for Form 2210.

.This is an Image: taxtip.gifIt would be helpful for you to have a copy of your 2020 tax return and an estimate of your 2021 income nearby while reading this chapter. Also, keep in mind the items under

What’s New for 2021

, earlier..

Xem thêm: Cho sơ đồ chuyển hóa sau Số phản ứng oxi hóa-khử xảy ra trong sơ đồ trên là

Topics

This chapter discusses:

  • Who must pay estimated tax,

  • How to figure estimated tax (including illustrated examples),

  • When to pay estimated tax,

  • How to figure each payment, and

  • How to pay estimated tax.

Useful Items

You may want to see:

Form (and Instructions)

  • 1040-ES Estimated Tax for Individuals

See

How To Get Tax Help

at the end of this publication for information about how to get this publication and form.

Worksheets.

You may need to use several of the blank worksheets included in this chapter. See

Worksheets for Chapter 2

to locate what you need.

Who Does Not Have To Pay Estimated Tax

If you receive salaries and wages, you may be able to avoid paying estimated tax by asking your employer to take more tax out of your earnings. To do this, file a new Form W-4 with your employer. See

chapter 1

.

Estimated tax not required.

You don’t have to pay estimated tax for 2021 if you meet all three of the following conditions.

  • You had no tax liability for 2020.

  • You were a U.S. citizen or resident alien for the whole year.

  • Your 2020 tax year covered a 12-month period.

You had no tax liability for 2020 if your total tax (defined later under

Total tax for 2020—line 12b

) was zero or you didn’t have to file an income tax return.

This is an Image: 15008e12.gif

Figure 2-A: Do You Have To Pay Estimated Tax?

Please click here for the text description of the image.

Who Must Pay Estimated Tax

If you owed additional tax for 2020, you may have to pay estimated tax for 2021.

You can use the following general rule as a guide during the year to see if you will have enough withholding, or should increase your withholding or make estimated tax payments.

General Rule

In most cases, you must pay estimated tax for 2021 if both of the following apply.

  1. You expect to owe at least $1,000 in tax for 2021 after subtracting your withholding and tax credits.

  2. You expect your withholding and tax credits to be less than the smaller of:

    1. 90% of the tax to be shown on your 2021 tax return, or

    2. 100% of the tax shown on your 2020 tax return. Your 2020 tax return must cover all 12 months.

Note. The percentages in (2a) or (2b) just listed may be different if you are a farmer, fisherman, or higher income taxpayer. See

Special Rules

, later.

.This is an Image: caution.gifIf the result from using the general rule above suggests that you won’t have enough withholding, complete the 2021 Estimated Tax Worksheet for a more accurate calculation..

Figure 2-A

takes you through the general rule. You may find this helpful in determining if you must pay estimated tax.

.This is an Image: taxtip.gifIf all your income will be subject to income tax withholding, you probably don’t need to pay estimated tax..

Example 1.

Jane Smart uses Figure 2-A and the following information to figure whether she should pay estimated tax for 2021. She files Form 1040 as head of household, takes the standard deduction, and expects no refundable credits for 2021.

Expected adjusted gross income (AGI) for 2021 $74,550
AGI for 2020 $60,000
Total tax on 2020 return (Form 1040,
line 24)
$ 7,554
Total 2021 estimated tax (line 11c of the 2020 Estimated Tax Worksheet) $11,015
Tax expected to be withheld in
2021
$10,000

Jane’s answer to Figure 2-A, box 1, is YES; she expects to owe at least $1,000 for 2021 after subtracting her withholding from her expected total tax ($11,015 − $10,000 = $1,015). Her answer to box 2a is YES; she expects her income tax withholding ($10,000) to be at least 90% of the tax to be shown on her 2021 return ($11,015 × 90% (0.90) = $9,913.50). Jane does not need to pay estimated tax.

Example 2.

The facts are the same as in Example 1, except that Jane expects only $7,000 tax to be withheld in 2021. Because that is less than $9,913.50, her answer to box 2a is NO.

Jane’s answer to box 2b is also NO; she does not expect her income tax withholding ($7,000) to be at least 100% of the total tax shown on her 2020 return ($7,554). Jane must increase her withholding or pay estimated tax for 2021.

Example 3.

The facts are the same as in Example 2, except that the total tax shown on Jane’s 2020 return was $6,400. Because she expects to have more than $6,400 withheld in 2021 ($7,000), her answer to box 2b is YES. Jane does not need to pay estimated tax for 2021.

Married Taxpayers

If you qualify to make joint estimated tax payments, apply the rules discussed here to your joint estimated income.

You and your spouse can make joint estimated tax payments even if you are not living together.

However, you and your spouse can’t make joint estimated tax payments if:

  • You are legally separated under a decree of divorce or separate maintenance,

  • You and your spouse have different tax years, or

  • Either spouse is a nonresident alien (unless that spouse elected to be treated as a resident alien for tax purposes). See Choosing Resident Alien Status in Pub. 519.

Note.

Individuals who are in registered domestic partnerships, civil unions, or other similar formal relationships that are not marriages under state law can’t make joint estimated tax payments. These individuals can take credit only for the estimated tax payments that he or she made.

If you and your spouse can’t make joint estimated tax payments, apply these rules to your separate estimated income.

Making joint or separate estimated tax payments won’t affect your choice of filing a joint tax return or separate returns for 2021.

2020 separate returns and 2021 joint return.

If you plan to file a joint return with your spouse for 2021, but you filed separate returns for 2020, your 2020 tax is the total of the tax shown on your separate returns. You filed a separate return if you filed as single, head of household, or married filing separately.

2020 joint return and 2021 separate returns.

If you plan to file a separate return for 2021, but you filed a joint return for 2020, your 2020 tax is your share of the tax on the joint return. You file a separate return if you file as single, head of household, or married filing separately.

To figure your share of the tax on a joint return, first figure the tax both you and your spouse would have paid had you filed separate returns for 2020 using the same filing status for 2021. Then, multiply the tax on the joint return by the following fraction.

  The tax you would have paid had you filed a separate return  
The total tax you and your spouse would have paid had you filed separate returns

Example.

Joe and Heather filed a joint return for 2020 showing taxable income of $48,500 and a tax of $5,428. Of the $48,500 taxable income, $40,100 was Joe’s and the rest was Heather’s. For 2021, they plan to file married filing separately. Joe figures his share of the tax on the 2020 joint return as follows.

Tax on $40,100 based on separate return $4,618
Tax on $8,400 based on separate return 843
Total $5,461
Joe’s percentage of total ($4,618 ÷ $5,461) 85%
Joe’s share of tax on joint return
($5,428 × 85% (0.85))
$4,614

Special Rules

There are special rules for farmers, fishermen, and certain higher income taxpayers.

Farmers and Fishermen

If at least two-thirds of your gross income for 2020 or 2021 is from farming or fishing, substitute 662/3% for 90% in (2a) under

General Rule

, later.

Gross income.

Your gross income is all income you receive in the form of money, goods, property, and services that isn’t exempt from tax. To determine whether two-thirds of your gross income for 2020 was from farming or fishing, use as your gross income the total of the income (not loss) amounts.

Joint returns.

On a joint return, you must add your spouse’s gross income to your gross income to determine if at least two-thirds of your total gross income is from farming or fishing.

Gross income from farming.

This is income from cultivating the soil or raising agricultural commodities. It includes the following amounts.

  • Income from operating a stock, dairy, poultry, bee, fruit, or truck farm.

  • Income from a plantation, ranch, nursery, range, orchard, or oyster bed.

  • Crop shares for the use of your land.

  • Gains from sales of draft, breeding, dairy, or sporting livestock.

For 2020, gross income from farming is the total of the following amounts.

  • Schedule F (Form 1040), Profit or Loss From Farming, line 9.

  • Form 4835, Farm Rental Income and Expenses, line 7.

  • Your share of the gross farming income from a partnership, S corporation, estate or trust from Schedule K-1 (Form 1065), Schedule K-1 (Form 1120-S), or Schedule K-1 (Form 1041).

  • Your gains from sales of draft, breeding, dairy, or sporting livestock shown on Form 4797, Sales of Business Property.

Wages you receive as a farm employee and wages you receive from a farm corporation are not gross income from farming.

Gross income from fishing.

This is income from catching, taking, harvesting, cultivating, or farming any kind of fish, shellfish (for example, clams and mussels), crustaceans (for example, lobsters, crabs, and shrimp), sponges, seaweeds, or other aquatic forms of animal and vegetable life.

Gross income from fishing includes the following amounts.

  • Schedule C (Form 1040), Profit or Loss From Business, line 7.

  • Income for services as an officer or crew member of a vessel while the vessel is engaged in fishing.

  • Your share of the gross fishing income from a partnership, S corporation, estate or trust from Schedule K-1 (Form 1065), Schedule K-1 (Form 1120S), or Schedule K-1 (Form 1041).

  • Certain taxable interest and punitive damage awards received in connection with the Exxon Valdez litigation.

  • Income for services normally performed in connection with fishing.

Services normally performed in connection with fishing include:

  • Shore service as an officer or crew member of a vessel engaged in fishing; and

  • Services that are necessary for the immediate preservation of the catch, such as cleaning, icing, and packing the catch.

Higher Income Taxpayers

If your AGI for 2020 was more than $150,000 ($75,000 if your filing status for 2021 is married filing a separate return), substitute 110% for 100% in (2b) under

General Rule

, later.

For 2020, AGI is the amount shown on Form 1040 or 1040-SR, line 11.

Note.

This rule does not apply to farmers and fishermen.

Aliens

Resident and nonresident aliens may also have to pay estimated tax. Resident aliens should follow the rules in this publication, unless noted otherwise. Nonresident aliens should get Form 1040-ES (NR), U.S. Estimated Tax for Nonresident Alien Individuals.

You are an alien if you are not a citizen or national of the United States. You are a resident alien if you either have a green card or meet the substantial presence test.

For more information about withholding, the substantial presence test, and Form 1040-ES (NR), see Pub. 519.

Estates and Trusts

Estates and trusts must also pay estimated tax. However, estates (and certain grantor trusts that receive the residue of the decedent’s estate under the decedent’s will) are exempt from paying estimated tax for the first 2 years after the decedent’s death.

Estates and trusts must use Form 1041-ES, Estimated Income Tax for Estates and Trusts, to figure and pay estimated tax.

How To Figure Estimated Tax

To figure your estimated tax, you must figure your expected AGI, taxable income, taxes, deductions, and credits for the year.

When figuring your 2021 estimated tax, it may be helpful to use your income, deductions, and credits for 2020 as a starting point. Use your 2020 federal tax return as a guide. You can use Form 1040-ES to figure your estimated tax. Nonresident aliens use Form 1040-ES (NR) to figure estimated tax.

You must make adjustments both for changes in your own situation and for recent changes in the tax law. Some of these changes are discussed earlier under

What’s New for 2021

. For information about these and other changes in the law, visit the IRS website at IRS.gov.

The instructions for Form 1040-ES include a worksheet to help you figure your estimated tax. Keep the worksheet for your records.

2021 Estimated Tax Worksheet

Use

Worksheet 2-1

to help guide you through the information about completing the 2021 Estimated Tax Worksheet. You can also find a copy of the worksheet in the instructions for Form 1040-ES.

Expected AGI—Line 1

Your expected AGI for 2021 (line 1) is your expected total income minus your expected adjustments to income.

Total income.

Include in your total income all the income you expect to receive during the year, even income that is subject to withholding. However, don’t include income that is tax exempt.

Total income includes all income and loss for 2021 that, if you had received it in 2020, would have been included on your 2020 tax return in the total on line 9 of Form 1040 or 1040-SR.

.This is an Image: pencil.gif Social security and railroad retirement benefits. If you expect to receive social security or tier 1 railroad retirement benefits during 2021, use

Worksheet 2-2

to figure the amount of expected taxable benefits you should include on line 1. .

Adjustments to income.

Be sure to subtract from your expected total income all of the adjustments you expect to take on your 2021 tax return.

.This is an Image: pencil.gif Self-employed. If you expect to have income from self-employment, use

Worksheet 2-3

to figure your expected self-employment tax and your allowable deduction for self-employment tax. Include the amount from Worksheet 2-3 in your expected adjustments to income. If you file a joint return and both you and your spouse have net earnings from self-employment, each of you must complete a separate worksheet..

Expected Taxable Income— Line 2

Reduce your expected AGI for 2021 (line 1) by either your expected itemized deductions or your standard deduction.

Itemized deductions—line 2a.

If you expect to claim itemized deductions on your 2021 tax return, enter the estimated amount on line 2a.

Itemized deductions are the deductions that can be claimed on Schedule A (Form 1040).

Standard deduction—line 2a.

If you expect to claim the standard deduction on your 2021 tax return, enter the amount on line 2a. Use

Worksheet 2-4

to figure your standard deduction.

No standard deduction.

The standard deduction for some individuals is zero. Your standard deduction will be zero if you:

  • File a separate return and your spouse itemizes deductions,

  • Are a dual-status alien, or

  • File a return for a period of less than 12 months because you change your accounting period.

Charitable contributions—line 2a.

If you don’t expect to claim itemized deductions on your 2021 tax return, you (or you and your spouse if filing jointly) may be able to take a charitable contribution deduction of up to $300 ($600 if married filing jointly) for contributions made by cash or check in 2021. Add this contribution to the standard deduction amount entered on line 2a.

Generally, this includes contributions made to organizations that are religious, charitable, educational, scientific, or literary in purpose. See Pub. 526 for more information on the types of organizations that qualify. A deduction can’t be taken for a contribution to an organization described in I.R.C. 509(a)(3) or for the establishment of a new, or maintenance of an existing, donor-advised fund.

Expected Taxes and Credits— Lines 4–11c

After you have figured your expected taxable income (line 3), follow the steps next to figure your expected taxes, credits, and total tax for 2021. Most people will have entries for only a few of these steps. However, you should check every step to be sure you don’t overlook anything.

Step 1.

Figure your expected income tax (line 4). Generally, you will use the

2021 Tax Rate Schedules

to figure your expected income tax.

However, see below for situations where you must use a different method to figure your estimated tax.

Tax on child’s investment income.

You must use a special method to figure tax on the income of the following children who have more than $2,200 of investment income.

  1. Children under age 18 at the end of 2021.

  2. The following children if their earned income isn’t more than half their support.

    1. Children age 18 at the end of 2021.

    2. Children who are full-time students at least age 19 but under age 24 at the end of 2021.

See Pub. 929, Tax Rules for Children and Dependents. Although the ages and dollar amounts in the publication may be different in the 2020 revision, this reference will give you basic information for figuring the tax.

Tax on net capital gain.

The regular income tax rates for individuals don’t apply to a net capital gain. Instead, your net capital gain is taxed at a lower maximum rate.

The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss.

.This is an Image: pencil.gif Tax on capital gain and qualified dividends. If the amount on line 1 includes a net capital gain or qualified dividends, use

Worksheet 2-5

to figure your tax. .

Note.

The tax rate on your capital gains and dividends will depend on your income.

.This is an Image: pencil.gif Tax if excluding foreign earned income or excluding or deducting foreign housing. If you expect to claim the foreign earned income exclusion or the housing exclusion or deduction on Form 2555, use

Worksheet 2-6

to figure your estimated tax..

Step 2.

Total your expected taxes (line 6). Include on line 6 the sum of the following.

  1. Your tax on line 6.

  2. Your expected alternative minimum tax (AMT) from Form 6251.

  3. Your expected additional taxes from Form 8814, Parents’ Election To Report Child’s Interest and Dividends, and Form 4972, Tax on Lump-Sum Distributions.

  4. Any recapture of education credits.

Step 3.

Subtract your expected credits (line 7). If you are using your 2020 return as a guide and filed Form 1040 or 1040-SR, your total credits for 2020 were shown on line 21.

If your credits on line 7 are more than your taxes on line 6, enter -0- on line 8 and go to Step 4.

Step 4.

Add your expected self-employment tax (line 9). You should already have figured your self-employment tax (see

Self-employed

under Expected AGI—Line 1, earlier).

Step 5.

Add your expected other taxes (line 10).

Other taxes include the following. The total of these taxes are entered on line 10.

  1. Additional tax on early distributions from:

    1. An IRA or other qualified retirement plan,

    2. A tax-sheltered annuity, or

    3. A modified endowment contract entered into after June 20, 1988.

  2. Household employment taxes if:

    1. You will have federal income tax withheld from wages, pensions, annuities, gambling winnings, or other income; or

    2. You would be required to make estimated tax payments even if you didn’t include household employment taxes when figuring your estimated tax.

  3. Amounts written on Form 1040 or 1040-SR on the line for “other taxes” (Schedule 2 (Form 1040), line 8). But don’t include recapture of a federal mortgage subsidy; tax on excess golden parachute payments; look-back interest due under section 167(g) or 460(b) of the Internal Revenue Code; excise tax on insider stock compensation from an expatriated corporation; or uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance.

  4. Repayment of the first-time homebuyer credit. See Form 5405.

  5. Additional Medicare Tax.

    A 0.9% Additional Medicare Tax applies to your combined Medicare wages and self-employment income and/or your RRTA compensation that exceeds the amount listed in the following chart, based on your filing status.

    Filing Status Threshold Amount
    Married filing jointly $250,000
    Married filing separately $125,000
    Single $200,000
    Head of household $200,000
    Qualifying widow(er) $200,000

    Medicare wages and self-employment income are combined to determine if your income exceeds the threshold. A self-employment loss should not be considered for purposes of this tax. RRTA compensation should be separately compared to the threshold. Your employer is responsible for withholding the 0.9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000 in 2021. You should consider this withholding, if applicable, in determining whether you need to make an estimated payment.

  6. Net Investment Income Tax (NIIT). The NIIT is 3.8% of the lesser of your net investment income or the excess of your MAGI over the amount listed in the following chart, based on your filing status.

    Filing Status Threshold Amount
    Married filing jointly $250,000
    Married filing separately $125,000
    Single $200,000
    Head of household $200,000
    Qualifying widow(er) $250,000

Step 6.

Subtract your refundable credits (line 11c). These include the earned income credit, additional child tax credit, fuel tax credit, net premium tax credit, refundable American opportunity credit, and refundable amount from Form 8885.

To figure your expected fuel tax credit, don’t include fuel tax for the first 3 quarters of the year that you expect to have refunded to you.

The result of Steps 1 through 6 is your total estimated tax for 2021 (line 11c).

Required Annual Payment— Line 12c

On lines 12a through 12c, figure the total amount you must pay for 2021, through withholding and estimated tax payments, to avoid paying a penalty.

General rule.

The total amount you must pay is the smaller of:

  1. 90% of your total expected tax for 2021, or

  2. 100% of the total tax shown on your 2020 return. Your 2020 tax return must cover all 12 months.

Special rules.

There are special rules for higher income taxpayers and for farmers and fishermen.

Higher income taxpayers.

If your AGI for 2020 was more than $150,000 ($75,000 if your filing status for 2021 is married filing separately), substitute 110% for 100% in (2) above. This rule does not apply to farmers and fishermen.

For 2020, AGI is the amount shown on Form 1040 or 1040-SR, line 11.

Example.

Jeremy Martin’s total tax on his 2020 return was $42,581, and his expected tax for 2021 is $71,253. His 2020 AGI was $180,000. Because Jeremy had more than $150,000 of AGI in 2020, he figures his required annual payment as follows. He determines that 90% of his expected tax for 2021 is $64,128 (90% (0.90) × $71,253). Next, he determines that 110% of the tax shown on his 2020 return is $46,839 (110% (1.10) x $42,581). Finally, he determines that his required annual payment is $46,839, the smaller of the two.

Farmers and fishermen.

If at least two-thirds of your gross income for 2020 or 2021 is from farming or fishing, your required annual payment is the smaller of:

  1. 662/3% (0.6667) of your total tax for 2021, or

  2. 100% of the total tax shown on your 2020 return. (Your 2020 tax return must cover all 12 months.)

For definitions of “gross income from farming” and “gross income from fishing,” see

Farmers and Fishermen

, earlier, under Special Rules.

Total tax for 2020—line 12b.

Your 2020 total tax is the amount on line 24 reduced by the following.

  1. Unreported social security and Medicare tax or RRTA tax from Forms 4137 or 8919 included on Schedule 2 (Form 1040), line 5.

  2. The following amounts from Form 5329 included on Schedule 2 (Form 1040), line 6.

    1. Any tax on excess contributions to an IRA, Archer MSA, Coverdell education savings account, health savings account, and ABLE account.

    2. Any tax on excess accumulations in qualified retirement plans.

  3. The following write-ins on Schedule 2 (Form 1040), line 8.

    1. Excise tax on excess golden parachute payments (identified as “EPP”).

    2. Excise tax on insider stock compensation from an expatriated corporation (identified as “ISC”).

    3. Look-back interest due under section 167(g) (identified as “From Form 8866”).

    4. Look-back interest due under section 460(b) (identified as “From Form 8697”).

    5. Recapture of federal mortgage subsidy (identified as “FMSR”).

    6. Uncollected social security and Medicare tax or RRTA tax on tips or group-term life insurance (identified as “UT”).

  4. Any refundable credit amounts on Form 1040 or 1040-SR, line 27, 28, 29, or 30 and Schedule 3 (Form 1040), lines 8, 11, 12b, and credit from Form 8885 included on line 12c.

Total Estimated Tax Payments Needed—Line 14a

Use lines 13 and 14a to figure the total estimated tax you may be required to pay for 2021. Subtract your expected withholding from your required annual payment (line 12c). You must usually pay this difference in four equal installments. See

When To Pay Estimated Tax

and

How To Figure Each Payment

, later.

You don’t have to pay estimated tax if:

  • Line 12c minus line 13 is zero or less, or

  • Line 11c minus line 13 is less than $1,000.

Withholding—line 13.

Your expected withholding for 2021 (line 13) includes the income tax you expect to be withheld from all sources (wages, pensions and annuities, etc.). It includes excess social security and tier 1 railroad retirement tax you expect to be withheld from your wages and compensation. For this purpose, you will have excess social security or tier 1 railroad retirement tax withholding for 2021 only if your wages and compensation from two or more employers are more than $142,800.

It also includes Additional Medicare Tax you expect to be withheld from your wages or compensation. Your employer is responsible for withholding the 0.9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays to you in excess of $200,000.

When To Pay Estimated Tax

For estimated tax purposes, the year is divided into four payment periods. Each period has a specific payment due date. If you don’t pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return.

If a payment is mailed, the date of the U.S. postmark is considered the date of payment. The general payment periods and due dates for estimated tax payments are shown next. For exceptions to the dates listed, see

Saturday, Sunday, holiday rule

.

For the period: Due date:
Jan. 11 – March 31 April 15
April 1 – May 31 June 15
June 1 – Aug. 31 Sept. 15
Sept. 1 – Dec. 31 Jan. 18, next year2
     
  1 If your tax year does not begin on January 1,
see

Fiscal-year taxpayers

below.

 
  2 See

January payment

below.

.This is an Image: caution.gifThe first estimated tax payment is due on April 15, 2021. The extended due date for Forms 1040 and 1040-SR does not apply to estimated tax payments..

For more information, see

Filing and Payment Deadlines Questions and Answers

on IRS.gov.

Saturday, Sunday, holiday rule.

If the due date for an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be on time if you make it on the next day that isn’t a Saturday, Sunday, or a holiday. See Pub. 509 for a list of all legal holidays.

January payment.

If you file your 2021 Form 1040 or 1040-SR by January 31, 2022, and pay the rest of the tax you owe, you don’t need to make the payment due on January 18, 2022.

Example.

Janet Adams does not pay any estimated tax for 2021. She files her 2021 income tax return and pays the balance due shown on her return on January 26, 2022.

Janet’s estimated tax for the fourth payment period is considered to have been paid on time. However, she may owe a penalty for not making the first three estimated tax payments, if required. Any penalty for not making those payments will be figured up to January 26, 2022.

Fiscal-year taxpayers.

If your tax year does not start on January 1, your payment due dates are:

  1. The 15th day of the 4th month of your fiscal year,

  2. The 15th day of the 6th month of your fiscal year,

  3. The 15th day of the 9th month of your fiscal year, and

  4. The 15th day of the 1st month after the end of your fiscal year.

You don’t have to make the last payment listed above if you file your income tax return by the last day of the first month after the end of your fiscal year and pay all the tax you owe with your return.

When To Start

You don’t have to make estimated tax payments until you have income on which you will owe income tax. If you have income subject to estimated tax during the first payment period, you must make your first payment by the due date for the first payment period.

You have several options when paying estimated taxes. You can:

  • Apply an overpayment from the previous tax year,

  • Pay all your estimated tax by the due date of your first payment, or

  • Pay it in installments.

.This is an Image: caution.gifTo the extent you have a portion of an overpayment of your 2020 tax as of April 15, 2021 (because payments you made on or before April 15, 2021, exceed your 2020 tax liability), that portion of the overpayment would be available for crediting as of April 15, 2021, and so would be applied as of April 15, 2021, whether your 2020 return is filed on April 15, May 17, or October 15, 2021. .

To the extent you have a portion of an overpayment of your 2020 tax that is attributable to a payment made after April 15, 2021 (including a payment made with a valid extension request on May 17, 2021), that portion of the overpayment would not be available for crediting as of April 15, 2021, and so would be applied as of the payment received date, and not applied as of April 15, 2021. This is true even if the payment was made with a valid extension request on May 17, 2021, and you later elect to have a refund on your timely filed 2020 tax return credited to your 2021 estimated tax. The amount of that 2020 refund will be credited to your 2021 estimated tax as of the date you made the payment resulting in an overpayment, and therefore may not be a timely payment for the first quarter 2021’s estimated taxes.

If you choose to pay in installments, make your first payment by the due date for the first payment period. Make your remaining installment payments by the due dates for the later periods.

To avoid any estimated tax penalties, all installments must be paid by their due date and for the required amount.

No income subject to estimated tax during first period.

If you don’t have income subject to estimated tax until a later payment period, you must make your first payment by the due date for that period. You can pay your entire estimated tax by the due date for that period or you can pay it in installments by the due date for that period and the due dates for the remaining periods. Table 2-1 shows the general due dates for making installment payments when the due date does not fall on a Saturday, Sunday, or holiday.

Table 2-1. General Due Dates for Estimated Tax Installment Payments

If you first have income on which you must pay estimated tax: Make a
payment
by:*
Make later
installments
by:*
Before April 1 April 15 June 15
    Sept. 15
    Jan. 15 next year
April 1–May 31 June 15 Sept. 15
    Jan. 15 next year
June 1–Aug. 31 Sept. 15 Jan. 15 next year
After Aug. 31 Jan. 15
next year
(None)

 

*See

January payment

and

Saturday, Sunday, holiday rule

, earlier.

How much to pay to avoid penalty.

To determine how much you should pay by each payment due date, see

How To Figure Each Payment

, later.

Farmers and Fishermen

If at least two-thirds of your gross income for 2020 or 2021 is from farming or fishing, you have only one payment due date for your 2021 estimated tax: January 18, 2022. The due dates for the first three payment periods, discussed under

When To Pay Estimated Tax

, earlier, don’t apply to you.

If you file your 2021 Form 1040 or 1040-SR by March 1, 2022, and pay all the tax you owe at that time, you don’t need to make an estimated tax payment.

Fiscal year farmers and fishermen.

If you are a farmer or fisherman, but your tax year does not start on January 1, you can either:

  • Pay all your estimated tax by the 15th day after the end of your tax year, or

  • File your return and pay all the tax you owe by the 1st day of the 3rd month after the end of your tax year.

How To Figure Each Payment

After you have figured your total estimated tax, figure how much you must pay by the due date of each payment period. You should pay enough by each due date to avoid a penalty for that period. If you don’t pay enough during any payment period, you may be charged a penalty even if you are due a refund when you file your tax return. The penalty is discussed in the Instructions for Form 2210.

Regular Installment Method

If your first estimated tax payment is due April 15, 2021, you can figure your required payment for each period by dividing your annual estimated tax due (line 14a of the 2021 Estimated Tax Worksheet (Worksheet 2-1)) by 4. Enter this amount on line 15. However, use this method only if your income is basically the same throughout the year.

.This is an Image: taxtip.gifEven though some estimated tax payment due dates have been postponed or changed for 2021, you may still want to use the regular due dates to figure each required payment for each period..

Change in estimated tax.

After you make an estimated tax payment, changes in your income, adjustments, deductions, or credits may make it necessary for you to refigure your estimated tax. Pay the unpaid balance of your amended estimated tax by the next payment due date after the change or in installments by that date and the due dates for the remaining payment periods.

If you don’t receive your income evenly throughout the year, your required estimated tax payments may not be the same for each period. See

Annualized Income Installment Method

, later.

.This is an Image: pencil.gif Amended estimated tax. If you refigure your estimated tax during the year, or if your first estimated tax payment is due after April 15, 2021, figure your required payment for each remaining payment period using

Worksheet 2-10

.

.

Example.

Early in 2021, Mira Roberts figures that her estimated tax due is $1,800. She makes estimated tax payments on April 15 and June 15 of $450 each ($1,800 ÷ 4).

On July 10, she sells investment property at a gain. Her refigured estimated tax is $4,100. Her required estimated tax payment for the third payment period is $2,175, as shown in her filled-in

Worksheet 2-10

.

If Mira’s estimated tax does not change again, her required estimated tax payment for the fourth payment period will be $1,025.

Underpayment penalty.

The penalty is figured separately for each payment period. If you figure your payments using the regular installment method and later refigure your payments because of an increase in income, you may be charged a penalty for underpayment of estimated tax for the period(s) before you changed your payments. To see how you may be able to avoid or reduce this penalty, see Schedule AI—Annualized Income Installment Method in the Instructions for Form 2210.

Worksheet 2-10. Amended Estimated Tax Worksheet—Illustrated

             
1. Amended total estimated tax due 1. $4,100
2. Multiply line 1 by:        
  50% (0.50) if next payment is due June 15, 2021        
  75% (0.75) if next payment is due September 15,
2021
       
  100% (1.00) if next payment is due January 18,
2022
2. 3,075    
3. Estimated tax payments for all previous periods 3. 900    
4. Next required payment: Subtract line 3 from line 2 and enter the result (but not less than zero) here and on your payment voucher for your next required payment 4. $2,175    
  Note. If the payment on line 4 is due January 18, 2022, stop here. Otherwise, go to line 5.        
5. Add lines 3 and 4 5. 3,075
6. Subtract line 5 from line 1 and enter the result (but not less than zero) 6. 1,025
7. Each following required payment: If the payment on line 4 is due June 15, 2021, enter one-half of the amount on line 6 here and on the payment vouchers for your payments due September 15, 2021, and January 18, 2022. If the amount on line 4 is due September 15, 2021, enter the amount from line 6 here and on the payment voucher for your payment due January 18, 2022 7. $1,025

Worksheet 2-10. Amended Estimated Tax Worksheet—Blank

             
1. Amended total estimated tax due 1.  
2. Multiply line 1 by:        
  50% (0.50) if next payment is due June 15, 2021        
  75% (0.75) if next payment is due September 15,
2021
       
  100% (1.00) if next payment is due January 18,
2022
2.      
3. Estimated tax payments for all previous periods 3.      
4. Next required payment: Subtract line 3 from line 2 and enter the result (but not less than zero) here and on your payment voucher for your next required payment 4.      
  Note. If the payment on line 4 is due January 18, 2022, stop here. Otherwise, go to line 5.        
5. Add lines 3 and 4 5.  
6. Subtract line 5 from line 1 and enter the result (but not less than zero) 6.  
7. Each following required payment: If the payment on line 4 is due June 15, 2021, enter one-half of the amount on line 6 here and on the payment vouchers for your payments due September 15, 2021, and January 18, 2022. If the amount on line 4 is due September 15, 2021, enter the amount from line 6 here and on the payment voucher for your payment due January 18, 2022 7.  

Annualized Income Installment Method

If you don’t receive your income evenly throughout the year (for example, your income from a repair shop you operate is much larger in the summer than it is during the rest of the year), your required estimated tax payment for one or more periods may be less than the amount figured using the regular installment method.

The annualized income installment method annualizes your tax at the end of each period based on a reasonable estimate of your income, deductions, and other items relating to events that occurred from the beginning of the tax year through the end of the period. To see whether you can pay less for any period, complete the 2021 Annualized Estimated Tax Worksheet (

Worksheet 2-7

).

.This is an Image: caution.gifYou first must complete the 2021 Estimated Tax Worksheet (Worksheet 2-1) through line 14b..

Use the result you figure on line 32 of Worksheet 2-7 to make your estimated tax payments and complete your payment vouchers.

Note.

If you use the annualized income installment method to figure your estimated tax payments, you must file Form 2210 with your 2021 tax return. See Schedule AI—Annualized Income Installment Method in the Instructions for Form 2210 for more information.

Instructions for the 2021 Annualized Estimated Tax Worksheet (Worksheet 2-7)

.This is an Image: taxtip.gifUse

Worksheet 2-7

to help you follow these instructions..

The purpose of this worksheet is to determine your estimated tax liability as your income accumulates throughout the year, rather than dividing your entire year’s estimated tax liability by four as if your income was earned equally throughout the year. The top of the worksheet shows the dates for each payment period. The periods build; that is, each period includes all previous periods. After the end of each payment period, complete the corresponding worksheet column to figure the payment due for that period.

Line 1.

Enter your AGI for the period. This is your gross income for the period, including your share of partnership or S corporation income or loss, minus your adjustments to income for that period. See

Expected AGI—Line 1

, earlier.

Self-employment income.

If you had self-employment income, first complete Section B of this worksheet. Use the amounts on line 41 when figuring your expected AGI to enter in each column of Section A, line 1.

Line 4.

Be sure to consider deduction limits figured on Schedule A (Form 1040), such as the $10,000 limit on state and local taxes. Figure your deduction limits using your expected AGI in the corresponding column of line 1 (2021 Annualized Estimated Tax Worksheet (

Worksheet 2-7

)).

Line 7.

If you won’t itemize your deductions, use

Worksheet 2-4

to figure your standard deduction.

Line 12.

Generally, you will use the

Tax Rate Schedules

to figure the tax on your annualized income. However, see below for situations where you must use a different method to figure your estimated tax.

Tax on child’s investment income.

You must use a special method to figure tax on the income of the following children who have more than $2,200 of investment income.

  1. Children under age 18 at the end of 2021.

  2. The following children if their earned income isn’t more than half their support.

    1. Children age 18 at the end of 2021.

    2. Children who are full-time students at least age 19 but under age 24 at the end of 2021.

See Pub. 929.

Tax on net capital gain.

The regular income tax rates for individuals don’t apply to a net capital gain. Instead, your net capital gain is taxed at a lower maximum rate.

The term “net capital gain” means the amount by which your net long-term capital gain for the year is more than your net short-term capital loss.

Tax on qualified dividends and capital gains.

For 2021, your capital gain and dividends rate will depend on your income.

.This is an Image: pencil.gif Tax on capital gain or qualified dividends. If the amount on line 1 includes a net capital gain or qualified dividends, use

Worksheet 2-8

to figure the amount to enter on line 10..

.This is an Image: pencil.gif Tax if excluding foreign earned income or excluding or deducting foreign housing. If you expect to claim the foreign earned income exclusion or the housing exclusion or deduction on Form 2555, use

Worksheet 2-9

to figure the amount to enter on line 10..

Line 13.

Add the tax from Forms 8814, 4972, and 6251 for the period. Also, include any recapture of an education credit for each period. You may owe this tax if you claimed an education credit in an earlier year and you received either tax-free educational assistance or a refund of qualifying expenses for the same student after filing your 2020 return.

Use the 2020 forms or worksheets to see if you will owe any of the taxes just discussed. Figure the tax based on your income and deductions during the period shown in the column headings. Multiply this amount by the annualization amounts shown for each column on line 2 of the 2021 Annualized Estimated Tax Worksheet (

Worksheet 2-7

). Enter the result on line 13 of this worksheet.

Line 15.

Include all the nonrefundable credits you expect to claim because of events that will occur during the period.

Note.

When figuring your credits for each period, annualize any item of income or deduction to figure each credit. For example, if you need to use your AGI to figure a credit, use line 3 of

Worksheet 2-7

to figure the credit for each column.

Line 18.

Add your expected other taxes.

Other taxes include the following.

  1. Additional tax on early distributions from:

    1. An IRA or other qualified retirement plan,

    2. A tax-sheltered annuity, or

    3. A modified endowment contract entered into after June 20, 1988.

  2. Household employment taxes if:

    1. You will have federal income tax withheld from wages, pensions, annuities, gambling winnings, or other income; or

    2. You would be required to make estimated tax payments even if you didn’t include household employment taxes when figuring your estimated tax.

  3. Amounts on Form 1040 or 1040-SR written on the line for “other taxes” (Schedule 2 (Form 1040), line 8). But don’t include recapture of a federal mortgage subsidy; tax on excess golden parachute payments; look-back interest due under section 167(g) or 460(b) of the Internal Revenue Code; excise tax on insider stock compensation from an expatriated corporation; and uncollected social security, Medicare, or RRTA tax on tips or group-term life insurance.

  4. Repayment of the first-time homebuyer credit if the home will cease to be your main home in 2021. See Form 5405 for exceptions.

  5. Additional Medicare Tax.

    A 0.9% Additional Medicare Tax applies to your combined Medicare wages and self-employment income and/or your RRTA compensation that exceeds the amount listed in the following chart, based on your filing status.

    Filing Status Threshold Amount
    Married filing jointly $250,000
    Married filing separately $125,000
    Single $200,000
    Head of household $200,000
    Qualifying widow(er) $200,000

    Medicare wages and self-employment income are combined to determine if your income exceeds the threshold. A self-employment loss should not be considered for purposes of this tax. RRTA compensation should be separately compared to the threshold.

    Your employer is responsible for withholding the 0.9% Additional Medicare Tax on Medicare wages or RRTA compensation it pays you in excess of $200,000 in 2020. You should consider this withholding, if applicable, in determining whether you need to make an estimated payment.

  6. Net Investment Income Tax (NIIT).

    The NIIT is 3.8% of the lesser of your net investment income or the excess of your MAGI over a specified threshold amount. Threshold amounts:

    Filing Status Threshold Amount
    Married filing jointly $250,000
    Married filing separately $125,000
    Single $200,000
    Head of household $200,000
    Qualifying widow(er) $250,000

Line 20.

Include all the refundable credits (other than withholding credits) you can claim because of events that occurred during the period. These include the earned income credit, additional child tax credit, fuel tax credit, net premium tax credit, any refundable credit from Form 8885, and refundable American opportunity credit.

Note.

When figuring your refundable credits for each period, annualize any item of income or deduction used to figure each credit.

Line 29.

If line 28 is smaller than line 25 and you are not certain of the estimate of your 2021 tax, you can avoid a penalty by entering the amount from line 25 on line 29.

Line 31.

For each period, include estimated tax payments made and any excess social security and railroad retirement tax.

Also, include estimated federal income tax withholding. One-fourth of your estimated withholding is considered withheld on the due date of each payment period. To figure the amount to include on line 31 for each period, multiply your total expected withholding for 2021 by:

  • 25% (0.25) for the first period,

  • 50% (0.50) for the second period,

  • 75% (0.75) for the third period, and

  • 100% (1.00) for the fourth period.

However, you may choose to include your withholding according to the actual dates on which the amounts will be withheld. For each period, include withholding made from the beginning of the period up to and including the payment due date. You can make this choice separately for the taxes withheld from your wages and all other withholding. For an explanation of what to include in withholding, see

Total Estimated Tax Payments Needed—Line 14a

, earlier.

Nonresident aliens.

If you will file Form 1040-NR and you don’t receive wages as an employee subject to U.S. income tax withholding, the instructions for the worksheet are modified as follows.

  1. Skip column (a).

  2. On line 1, enter your income for the period that is effectively connected with a U.S. trade or business.

  3. On line 21, increase your entry by the amount determined by multiplying your income for the period that isn’t effectively connected with a U.S. trade or business by the following.

    1. 72% (0.72) for column (b).

    2. 45% (0.45) for column (c).

    3. 30% (0.30) for column (d).

    However, if you can use a treaty rate lower than 30%, use the percentages determined by multiplying your treaty rate by 2.4, 1.5, and 1, respectively.

  4. On line 26, enter one-half of the amount from line 14c of the Form 1040-ES (NR) 2021 Estimated Tax Worksheet in column (b), and one-fourth in columns (c) and (d) of Worksheet 2-7.

  5. On lines 24 and 27, skip column (b).

  6. On line 31, if you don’t use the actual withholding method, include one-half of your total expected withholding in column (b) and one-fourth in columns (c) and (d).

See Pub. 519 for more information.

Estimated Tax Payments Not Required

You don’t have to pay estimated tax if your withholding in each payment period is at least as much as:

  • One-fourth of your required annual payment, or

  • Your required annualized income installment for that period.

You also don’t have to pay estimated tax if you will pay enough through withholding to keep the amount you will owe with your return under $1,000.

How To Pay Estimated Tax

There are several ways to pay estimated tax.

  • Credit an overpayment on your 2020 return to your 2021 estimated tax.

  • Pay by direct transfer from your bank account, or pay by debit or credit card using a pay-by-phone system or the Internet.

  • Send in your payment (check or money order) with a payment voucher from Form 1040-ES.

Credit an Overpayment

If you show an overpayment of tax after completing your Form 1040 or 1040-SR for 2020, you can apply part or all of it to your estimated tax for 2021. On Form 1040 or 1040-SR, enter the amount you want credited to your estimated tax rather than refunded. Take the amount you have credited into account when figuring your estimated tax payments.

.This is an Image: caution.gifTo the extent you have a portion of an overpayment of your 2020 tax as of April 15, 2021 (because payments you made on or before April 15, 2021, exceed your 2020 tax liability), that portion of the overpayment would be available for crediting as of April 15, 2021, and so would be applied as of April 15, 2021, whether your 2020 return is filed on April 15, May 17, or October 15, 2021. .

To the extent you have a portion of an overpayment of your 2020 tax that is attributable to a payment made after April 15, 2021 (including a payment made with a valid extension request on May 17, 2021), that portion of the overpayment would not be available for crediting as of April 15, 2021, and so would be applied as of the payment received date, and not applied as of April 15, 2021. This is true even if the payment was made with a valid extension request on May 17, 2021, and you later elect to have a refund on your timely filed 2020 tax return credited to your 2021 estimated tax. The amount of that 2020 refund will be credited to your 2021 estimated tax as of the date you made the payment resulting in an overpayment, and therefore may not be a timely payment for the first quarter 2021’s estimated taxes.

If you are a beneficiary of an estate or trust, and the trustee elects to credit 2021 trust payments of estimated tax to you, you can treat the amount credited as paid by you on January 18, 2022.

If you choose to have an overpayment of tax credited to your estimated tax, you can’t have any of that amount refunded to you until you file your tax return for the following year. You also can’t use that overpayment in any other way.

Pay Online

IRS offers an electronic payment option that is right for you. Paying online is convenient and secure and helps make sure we get your payments on time. To pay your taxes online or for more information, go to

IRS.gov/Payments

. You can pay using any of the following methods.

  • IRS Direct Pay. For online transfers directly from your checking or savings account at no cost to you, go to

    IRS.gov/Payments

    .

  • Pay by Card. To pay by debit or credit card, go to

    IRS.gov/Payments

    . There is a convenience fee charged by these service providers.

  • Electronic Funds Withdrawal (EFW) is an integrated e-file/e-pay option offered when filing your federal taxes electronically using tax preparation software, through a tax professional, or the IRS at

    IRS.gov/Payments

    .

  • Online Payment Agreement. If you can’t pay in full by the due date of your tax return, you can apply for an online monthly installment agreement at

    IRS.gov/OPA

    . Once you complete the online process, you will receive immediate notification of whether your agreement has been approved. A user fee is charged.

  • IRS2Go is the mobile application of the IRS; you can access Direct Pay or Pay by Card by downloading the application.

Pay by Phone

Paying by phone is another safe and secure method of paying electronically. Use one of the following methods: (1) call one of the debit or credit card service providers, or (2) use the Electronic Federal Tax Payment System (EFTPS).

Debit or credit card.

Call one of our service providers. Each charges a fee that varies by provider, card type, and payment amount.

WorldPay US, Inc.
844-PAY-TAX-8TM (844-729-8298)

www.payUSAtax.com

ACI Payments, Inc. (formerly Official Payments)
888-UPAY-TAXTM (888-872-9829)

fed.acipayonline.com

Link2GOV Corporation
888-PAY-1040TM (888-729-1040)

www.PAY1040.com

EFTPS.

To use EFTPS, you must be enrolled either online or have an enrollment form mailed to you. To make a payment using EFTPS, call 800-555-4477 (English) or 800-244-4829 (Español). People who are deaf, hard of hearing, or have a speech disability and who have access to TTY/TDD equipment can call 800-733-4829. For more information about EFTPS, go to

IRS.gov/Payments

or

EFTPS.gov

.

Pay by Mobile Device

To pay through your mobile device, download the IRS2Go application.

Pay by Cash

Cash is an in-person payment option for individuals provided through retail partners with a maximum of $1,000 per day per transaction. To make a cash payment, you must first be registered online with ACI Payments, Inc. at

fed.acipayonline.com

.

Pay by Check or Money Order Using the Estimated Tax Payment Voucher

Before submitting a payment through the mail, please consider alternative methods. One of our safe, quick, and easy electronic payment options might be right for you. Each payment of estimated tax by check or money order must be accompanied by a payment voucher from Form 1040-ES. If you use your own envelopes (and not the window envelope that comes with the 1040-ES package), make sure you mail your payment vouchers to the address shown in the Form 1040-ES instructions for the place where you live.

.This is an Image: caution.gifDon’t use the address shown in the Instructions for Forms 1040 and 1040-SR..

If you didn’t pay estimated tax last year, get a copy of Form 1040-ES from the IRS (see

How To Get Tax Help

, later). Follow the instructions to make sure you use the vouchers correctly.

Notice to taxpayers presenting checks.

When you provide a check as payment, you authorize us either to use information from your check to make a one-time electronic fund transfer from your account or to process the payment as a check transaction. When we use information from your check to make an electronic fund transfer, funds may be withdrawn from your account as soon as the same day we receive your payment, and you will not receive your check back from your financial institution.

No checks of $100 million or more accepted.

The IRS can’t accept a single check (including a cashier’s check) for amounts of $100,000,000 ($100 million) or more. If you are sending $100 million or more by check, you’ll need to spread the payment over two or more checks with each check made out for an amount less than $100 million. This limit doesn’t apply to other methods of payment (such as electronic payments). Please consider a method of payment other than check if the amount of the payment is over $100 million.

Joint estimated tax payments.

If you file a joint return and are making joint estimated tax payments, enter the names and social security numbers on the payment voucher in the same order as they will appear on the joint return.

Change of address.

You must notify the IRS if you are making estimated tax payments and you changed your address during the year. Complete Form 8822, Change of Address, and mail it to the address shown in the instructions for that form.

Worksheets for Chapter 2

Use the following worksheets and tables to figure your correct estimated tax.

IF you need… THEN use…
2021 Tax Rate Schedules

2021 Tax Rate Schedules

the 2021 Estimated Tax Worksheet

Worksheet 2-1

to estimate your taxable social security and railroad retirement benefits—line 1 of ES Worksheet (or Annualized ES Worksheet (Worksheet 2-7))

Worksheet 2-2

to estimate your self-employment (SE) tax and your deduction for SE tax—lines 1 and 11 of ES Worksheet (lines 1 and 17 of Annualized ES Worksheet (Worksheet 2-7))

Worksheet 2-3

to estimate your standard deduction—line 2 of ES Worksheet (line 7 of Annualized ES Worksheet (Worksheet 2-7))

Worksheet 2-4

to estimate your income tax if line 1 of your ES Worksheet includes a net capital gain or qualified dividends—line 4 of ES Worksheet

Worksheet 2-5

to estimate your income tax if you expect to claim a foreign earned income exclusion or foreign housing exclusion or deduction on Form 2555—line 4 of ES Worksheet

Worksheet 2-6

the 2021 Annualized Estimated Tax Worksheet (Annualized ES Worksheet)

Worksheet 2-7

to estimate your income tax if line 1 of your Annualized ES Worksheet includes a net capital gain or qualified dividends—line 10 of Annualized ES Worksheet

Worksheet 2-8

to estimate your income tax if you expect to claim a foreign earned income exclusion or foreign housing exclusion or deduction on Form 2555—line 10 of Annualized ES Worksheet

Worksheet 2-9

to refigure (amend) your estimated tax during the year

Worksheet 2-10

2021 Tax Rate Schedules

.This is an Image: caution.gif

Don’t use these Tax Rate Schedules to figure your 2020 taxes. Use them only to figure your 2021 estimated taxes.

Schedule X—Use if your 2021 filing status is
Single
Schedule Z— Use if your 2021 filing status is
Head of household
If line 3 is: The tax is:     If line 3 is: The tax is:    
Over— But not
over—
        of the
amount
over—
Over— But not
over—
        of the
amount
over—
$0 $9,950     10%   $0 $0 $14,200     10%   $0
9,950 40,525 $995.00 + 12%   9,950 14,200 54,200 $1,420.00 + 12%   14,200
40,525 86,375 4,664.00 + 22%   40,525 54,200 86,350 6,220.00 + 22%   54,200
86,375 164,925 14,751.00 + 24%   86,375 86,350 164,900 13,293.00 + 24%   86,350
164,925 209,425 33,603.00 + 32%   164,925 164,900 209,400 32,145.00 + 32%   164,900
209,425 523,600 47,843.00 + 35%   209,425 209,400 523,600 46,385.00 + 35%   209,400
523,600 – – – – – – 157,804.25 + 37%   523,600 523,600 – – – – – – 156,355.00 + 37%   523,600
Schedule Y-1— Use if your 2021 filing status is
Married filing jointly or Qualifying widow(er)
Schedule Y-2— Use if your 2021 filing status is
Married filing separately
If line 3 is: The tax is:     If line 3 is: The tax is:    
Over— But not
over—
        of the
amount
over—
Over— But not
over—
        of the
amount
over—
$0 $19,900     10%   $0 $0 $9,950     10%   $0
19,900 81,050 $1,990.00 + 12%   19,900 9,950 40,525 $995.00 + 12%   9,950
81,050 172,750 9,328.00 + 22%   81,050 40,525 86,375 4,664.00 + 22%   40,525
172,750 329,850 29,502.00 + 24%   172,750 86,375 164,925 14,751.00 + 24%   86,375
329,850 418,850 67,206.00 + 32%   329,850 164,925 209,425 33,603.00 + 32%   164,925
418,850 628,300 95,686.00 + 35%   418,850 209,425 314,150 47,843.00 + 35%   209,425
628,300 – – – – – – 168,993.50 + 37%   628,300 314,150 – – – – – – 84,496.75 + 37%   314,150
                           

Worksheet 2-1.2021 Estimated Tax Worksheet

.This is an Image: caution.gif

When this worksheet refers you to instructions, you can find those instructions in the 2021 Form 1040-ES.

1. Adjusted gross income you expect in 2021 (see instructions) 1.  
2a. Deductions

  • If you plan to itemize deductions, enter the estimated total of your itemized deductions.

  • If you don’t plan to itemize deductions, enter your standard deduction plus up to $300 ($600 if married filing jointly) for charitable contributions made by cash or check (see instructions)

2a.  
b. If you can take the qualified business income deduction, enter the estimated amount of the deduction 2b.  
c. Add lines 2a and 2b 2c.  
3. Subtract line 2c from line 1 3.  
4. Tax. Figure your tax on the amount on line 3 by using the 2021 Tax Rate Schedules.
Caution: If you will have qualified dividends or a net capital gain, or expect to exclude or deduct foreign earned income or housing, see Worksheets 2-5 and 2-6 to figure the tax
4.  
5. Alternative minimum tax from Form 6251 5.  
6. Add lines 4 and 5. Add to this amount any other taxes you expect to include in the total on Form 1040 or 1040-SR, line 16 6.  
7. Credits (see instructions). Don’t include any income tax withholding on this line 7.  
8. Subtract line 7 from line 6. If zero or less, enter -0- 8.  
9. Self-employment tax (see instructions) 9.  
10. Other taxes including, if applicable, Additional Medicare Tax and/or NIIT (see instructions) 10.  
11a. Add lines 8 through 10 11a.  
b. Earned income credit, additional child tax credit, fuel tax credit, net premium tax credit, refundable American opportunity credit, and refundable credit from Form 8885 11b.  
c. Total 2021 estimated tax. Subtract line 11b from line 11a. If zero or less, enter -0- 11c.  
12a. Multiply line 11c by 90% (0.90) (662/3% (0.6667) for farmers and fishermen) 12a.      
b. Required annual payment based on prior year’s tax (see instructions) 12b.      
c. Required annual payment to avoid a penalty. Enter the smaller of line 12a or 12b 12c.  
  Caution: Generally, if you don’t prepay (through income tax withholding and estimated tax payments) at least the amount on line 12c, you may owe a penalty for not paying enough estimated tax. To avoid a penalty, make sure your estimate on line 11c is as accurate as possible. Even if you pay the required annual payment, you may still owe tax when you file your return. If you prefer, you can pay the amount shown on line 11c.    
             
13. Income tax withheld and estimated to be withheld during 2021 (including income tax withholding on pensions, annuities, certain deferred income, etc.) 13.  
14a. Subtract line 13 from line 12c 14a.      
  Is the result zero or less?
Yes. Stop here. You are not required to make estimated tax payments.
No. Go to line 14b.
       
b. Subtract line 13 from line 11c 14b.      
  Is the result less than $1,000?
Yes. Stop here. You are not required to make estimated tax payments.
No. Go to line 15 to figure your required payment.
   
             
15. If the first payment you are required to make is due April 15, 2021, enter ¼ of line 14a (minus any 2020 overpayment that you are applying to this installment) here, and on your estimated tax payment voucher(s) if you are paying by check or money order 15.  

Worksheet 2-2.2021 Estimated Tax Worksheet—Line 1 Estimated Taxable Social Security and Railroad Retirement Benefits

Note. If you are using this worksheet to estimate your taxable social security or railroad retirement benefits for Worksheet 2-7, 2021 Annualized Estimated Tax Worksheet, multiply the expected amount of benefits for each period by the annualization amount shown on Worksheet 2-7, line 2, for the same period before entering it on line 1 below.
   
1. Enter your expected social security and railroad retirement benefits 1. _____
2. Enter one-half of line 1 2. _____
3. Enter your expected total income. Don’t include any social security and railroad retirement benefits, nontaxable interest income, nontaxable IRA distributions, or nontaxable pension distributions 3. _____
4. Enter your expected nontaxable interest income 4. _____
5. Enter (as a positive amount) the total of any expected exclusions or deductions for:

  • U.S. savings bond interest used for higher education expenses (Form 8815)

  • Employer-provided adoption benefits (Form 8839)

  • Foreign earned income or housing (Form 2555)

  • Income by bona fide residents of American Samoa (Form 4563) or Puerto Rico

5. _____
6. Add lines 2, 3, 4, and 5 6. _____
7. Enter your expected adjustments to income. Don’t include any student loan interest deduction 7. _____
8. Subtract line 7 from line 6. If zero or less, stop here.
Note. Don’t include any social security or railroad retirement benefits in the amount on line 1 of your 2021 Estimated Tax Worksheet (Worksheet 2-1) (or Annualized Estimated Tax Worksheet (Worksheet 2-7))
8. _____
9. Enter $25,000 ($32,000 if you expect to file married filing jointly; $0 if you expect to file married filing separately and expect to live with your spouse at any time during the year) 9. _____
10. Subtract line 9 from line 8. If zero or less, stop here.
Note. Don’t include any social security or railroad retirement benefits in the amount on line 1 of your Worksheet 2-1 (or Annualized Estimated Tax Worksheet (Worksheet 2-7))
10. _____
11. Enter $9,000 ($12,000 if you expect to file married filing jointly; $0 if you expect to file married filing separately and expect to live with your spouse at any time during the year) 11. _____
12. Subtract line 11 from line 10. If zero or less, enter -0- 12. _____
13. Enter the smaller of line 10 or line 11 13. _____
14. Enter one-half of line 13 14. _____
15. Enter the smaller of line 2 or line 14 15. _____
16. Multiply line 12 by 85% (0.85). If line 12 is zero, enter -0- 16. _____
17. Add lines 15 and 16 17. _____
18. Multiply line 1 by 85% (0.85) 18. _____
19. Enter the smaller of line 17 or line 18 19. _____
20. Expected taxable social security and railroad retirement benefits for the period. Divide line 19 by the annualization amount shown on Worksheet 2-7, line 2, for the same period and enter here. Include this amount in the total on line 1 of your 2021 Estimated Tax Worksheet (Worksheet 2-1) (or Annualized Estimated Tax Worksheet (Worksheet 2-7)) 20.  

Worksheet 2-3.2021 Estimated Tax Worksheet—Lines 1 and 9 Estimated Self-Employment Tax and Deduction Worksheet

1 a. Enter your expected income and profits subject to self-employment tax* 1a. _____   .
  b. If you will have farm income and also receive social security retirement or disability benefits, enter your expected Conservation Reserve Program payments that will be included on Schedule F (Form 1040) or listed on Schedule K-1 (Form 1065) 1b. _____    
2.   Subtract line 1b from line 1a 2. _____    
3.   Multiply line 2 by 92.35% (0.9235). If less than $400, don’t complete this worksheet; you won’t owe self-employment tax on your expected net earnings from self-employment 3. _____    
4.   Multiply line 3 by 2.9% (0.029) 4. _____
5.   Maximum income subject to social security tax 5. $142,800    
6.   Enter your expected wages (if subject to social security tax or the
6.2% portion of tier 1 railroad retirement tax)
6. _____    
7.   Subtract line 6 from line 5 7. _____    
    Note. If line 7 is zero or less, enter -0- on line 9 and skip to line 10.        
8.   Enter the smaller of line 3 or line 7 8. _____    
9.   Multiply line 8 by 12.4% (0.124) 9. _____
10.   Add line 4 and line 9. Enter the result here and on line 9 of your 2021 Estimated Tax Worksheet (Worksheet 2-1) (or line 15 of the Annualized Estimated Tax Worksheet (Worksheet 2-7)) 10. _____
11.   Multiply line 10 by 50% (0.50). This is your expected deduction for self-employment tax on Schedule 1 (Form 1040), line 14. Subtract this amount when figuring your AGI on line 1 of your 2021 Estimated Tax Worksheet (Worksheet 2-1) (or Annualized Estimated Tax Worksheet (Worksheet 2-7)) 11.  
*Net profit from self-employment is found on Schedule C, Schedule F, and Schedule K-1 (Form 1065).

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Worksheet 2-4.2021 Estimated Tax Worksheet—Line 2 Standard Deduction Worksheet

Caution. Don’t complete this worksheet if you expect your spouse to itemize on a separate return or you expect to be a dual-status alien. In either case, your standard deduction will be zero.
1. Enter the amount shown below for your filing status.        
  • Single or married filing separately—$12,550        
  • Married filing jointly or Qualifying widow(er)—$25,100        
  • Head of household—$18,800 1. _____    
2. Can you (or your spouse if filing jointly) be claimed as a dependent on someone else’s return?        
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No. Skip line 3; enter the amount from line 1 on line 4.    
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Yes. Go to line 3.    
3. Is your earned income* more than $750?        
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Yes. Add $350 to your earned income. Enter the total.        
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No. Enter $1,100 3. _____    
4. Enter the smaller of line 1 or line 3 4. _____
5. Were you (or your spouse if filing jointly) born before January 2, 1957, or blind?
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No. Go to line 6.
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Yes. Check if:
      a. You were This is an Image: box.gif

Born before January 2, 1957 This is an Image: box.gif

Blind

      b. Your spouse was This is an Image: box.gif

Born before January 2, 1957