Publication 505 - Tax Withholding And Estimated Tax (Page 15 of 49) in pdf

plan or tax-sheltered annuity that is not any of

choice, print “Revoked” by the checkbox on line

addition, they are not identical if the bets were

the following.

1 of the form.

placed in different pari-mutuel pools. For exam-

If you use Form W – 4P to revoke the choice

ple, a bet in a pool conducted by the racetrack

1) A minimum required distribution.

for periodic payments and you do not complete

and a bet in a separate pool conducted by an

line 2 of the form, the payer will withhold as if you

offtrack betting establishment in which the bets

2) One of a series of substantially equal peri-

were married and claiming three allowances.

are not pooled with those placed at the track are

odic pension or annuity payments made

not identical wagers.

over:

Backup withholding on gambling winnings.

a) Your life (or your life expectancy) or the

Gambling Winnings

If you have any kind of gambling winnings and

joint lives of you and your beneficiary

do not give the payer your social security num-

(or your life expectancies), or

ber, the payer may have to withhold income tax

Income tax is withheld from certain kinds of

b) A specified period of 10 or more years.

at the rate of 30%. This rule applies to keno

gambling winnings. For 2002, the amount with-

winnings of more than $1,500, bingo and slot

held is 27% of the proceeds paid (the amount of

3) A hardship distribution.

machine winnings of more than $1,200, and

your winnings minus the amount of your bet).

certain other gambling winnings of more than

The payer of a distribution must withhold at a

Gambling winnings of more than $5,000 from

$600.

20% rate on any part of an ERD that is not rolled

the following sources are subject to income tax

over directly to another qualified plan. You can-

withholding.

not elect not to have withholding on these distri-

•

Any sweepstakes, wagering pool, or lot-

butions.

tery.

Unemployment

•

Choosing Not To Have

Any other wager if the proceeds are at

Compensation

least 300 times the amount of the bet.

Income Tax Withheld

It does not matter whether your winnings are

You can choose to have income tax withheld

You can choose not to have income tax withheld

paid in cash, in property, or as an annuity. Win-

from unemployment compensation. To make

from your pension or annuity. This rule does not

nings not paid in cash are taken into account at

this choice, you will have to fill out Form W – 4V

apply to eligible rollover distributions. The payer

their fair market value.

(or a similar form provided by the payer) and

will tell you how to make this choice. If you use

give it to the payer. The amount withheld will be

Gambling winnings from bingo, keno, and slot

Form W – 4P, check the box on line 1 to make

10% of each payment.

machines are generally not subject to income

this choice. This choice will remain in effect until

tax withholding. However, you may need to pro-

Unemployment compensation is taxable. So,

you decide you want withholding.

vide the payer with a social security number to

if you do not have income tax withheld, you may

The payer must withhold if either of the fol-

avoid withholding. See Backup withholding on

have to make estimated tax payments. See

lowing applies:

gambling winnings, later. If you receive gam-

chapter 2.

bling winnings not subject to withholding, you

1) You do not give the payer your social se-

If you do not pay enough tax either through

may need to make estimated tax payments.

curity number (in the required manner), or

withholding or estimated tax, you may have to

(See chapter 2.)

pay a penalty. See chapter 4.

2) The IRS notifies the payer, before any

If you do not pay enough tax through with-

payment or distribution is made, that you

holding or estimated tax payments, you may be

Form 1099 – G. If income tax is withheld from

gave it an incorrect social security number.

subject to a penalty. (See chapter 4.)

your unemployment compensation, you will re-

If you do not have any income tax withheld

ceive a Form 1099 – G, Certain Government

Form W – 2G. If a payer withholds income tax

from your pension or annuity, or if you do not

Payments. Box 1 will show the amount of unem-

from your gambling winnings, you should re-

have enough withheld, you may have to make

ployment compensation you got for the year.

ceive a Form W – 2G, Certain Gambling Win-

estimated tax payments. See chapter 2.

Box 4 will show the amount of tax withheld.

nings, showing the amount you won and the

If you do not pay enough tax either through

amount withheld.

estimated tax or withholding, you may have to

Report the tax withheld on line 59 of Form

pay a penalty. See chapter 4 for information

1040.

Federal Payments

about this penalty.

Information to give payer. If the payer asks,

Outside the United States. If you are a U.S.

You can choose to have income tax withheld

you must give the payer all the following infor-

citizen or resident alien and you do not want to

from certain federal payments you receive.

mation.

have tax withheld from pension or annuity bene-

These payments are:

•

Your name, address, and social security

fits, you must give the payer of the benefits a

number.

home address in the United States or in a U.S.

1) Social security benefits,

•

possession. Otherwise, the payer must withhold

Whether you made identical wagers (ex-

2) Tier 1 railroad retirement benefits,

tax. For example, the payer would have to with-

plained next).

hold tax if you provide a U.S. address for a

3) Commodity credit loans you choose to in-

•

Whether someone else is entitled to any

nominee, trustee, or agent to whom the benefits

clude in your gross income, and

part of the winnings subject to withholding.

are to be delivered, but do not provide your own

4) Payments under the Agricultural Act of

If so, you must complete Form 5754,

home address in the United States or in a U.S.

1949 (7 U.S.C. 1421 et seq.), or title II of

Statement by Person(s) Receiving Gam-

possession.

the Disaster Assistance Act of 1988, as

bling Winnings, and return it to the payer.

amended, that are treated as insurance

The payer will use it to prepare a Form

Notice required of payer. The payer of your

proceeds and that you received because:

W – 2G for each of the winners.

pension or annuity must send you a notice telling

you about your right to choose not to have tax

a) Your crops were destroyed or damaged

Identical wagers. You may have to give the

withheld.

by drought, flood, or any other natural

payer a statement of the amount of your win-

Generally, the payer will not send a notice to

disaster, or

nings, if any, from identical wagers. If this state-

you if it is reasonable to believe that the entire

ment is required, the payer will ask you for it.

b) You were unable to plant crops be-

amount you will be paid is not taxable.

You provide this statement by signing Form

cause of a natural disaster described in

Revoking a choice not to have tax withheld.

W – 2G or, if required, Form 5754.

(a).

The payer of your pension or annuity will tell you

Identical wagers include two bets placed in a

how to revoke your choice not to have income

pari-mutuel pool on one horse to win a particular

To make this choice, you will have to fill out

tax withheld from periodic or nonperiodic pay-

race. However, the bets are not identical if one

Form W – 4V (or a similar form provided by the

ments. If you use Form W – 4P to revoke the

bet is “to win” and one bet is “to place.” In

payer) and give it to the payer. For 2002, you

Chapter 1 Tax Withholding for 2002

Page 15

Publication 505 - Tax Withholding And Estimated Tax Page 15

Related Articles

Related forms

Related Categories