Publication 505 - Tax Withholding And Estimated Tax (Page 7 of 49) in pdf

Credit Table B

Two-Earner/Two-Job Worksheet

they enter $7,950 on line 2. They subtract

Single

$7,950 from $11,300 and enter the result,

You should complete this worksheet if you have

$3,350, on line 3.

If estimated

Multiply

more than one job or are married and you and

The Greens expect to have an adjustment to

wages are:

credits

your spouse both work and the combined earn-

income of $3,000 for their deductible IRA contri-

by:

ings from all jobs are more than $35,000.

butions. They do not expect to have any other

adjustments to income. They enter $3,000 on

If you use this worksheet and your

$0 to 14,000

10.0

line 4.

earnings are more than $125,000

14,001 to 36,000

6.7

The Greens add line 3 and line 4 and enter

36,001 to 77,000

3.7

($175,000 if you are married), see Pub-

CAUTION

the total, $6,350, on line 5.

77,001 to 151,000

3.3

lication 919 to check that you are having enough

151,001 to 320,000

2.9

Joyce and John expect to receive $600 in

tax withheld.

over 320,000

2.6

interest and dividend income during the year.

They enter $600 on line 6 and subtract line 6

Credit Table C

Reducing your allowances (worksheet lines

from line 5. They enter the result, $5,750, on line

Head of Household

1 – 3). On line 1 of the worksheet, enter the

7. They divide line 7 by $3,000, and drop the

number from line H of the Personal Allowances

If estimated

Multiply

fraction to determine one additional allowance.

Worksheet (or line 10 of the Deductions and

wages are:

credits

They enter “1” on line 8.

Adjustments Worksheet, if used). Using Table 1

by:

The Greens enter “7” (the number from line H

on the Form W – 4, find the number listed beside

of the Personal Allowances Worksheet) on line 9

the amount of your estimated wages for the year

$0 to 23,000

10.0

and add it to line 8. They enter “8” on line 10.

from your lowest paying job (or if lower, your

23,001 to 51,000

6.7

spouse’s job). Enter that number on line 2.

51,001 to 111,000

3.7

Two-Earner/Two-Job

Worksheet.

The

Subtract line 2 from line 1 and enter the

111,001 to 172,000

3.3

Greens use this worksheet because they both

172,001 to 325,000

2.9

result (but not less than zero) on line 3 and on

work and together earn over $35,000. They

over 325,000

2.6

Form W – 4, line 5. If line 1 is more than or equal

enter “8” (the number from line 10 of the Deduc-

to line 2, do not use the rest of the worksheet (or

Credit Table D

tions and Adjustments Worksheet) on line 1.

skip to line 8 if you expect to owe amounts other

Married Filing Separately

Next, they use Table 1 on the Form W – 4 to

than income tax).

find the number to enter on line 2 of the work-

If line 1 is less than line 2, you should com-

If estimated

Multiply

sheet. Because they will file a joint return and

wages are:

credits

plete lines 4 through 9 of the worksheet to figure

their expected wages from their lowest paying

by:

the additional withholding needed to avoid un-

job are $13,300, they enter “2” on line 2. They

derwithholding.

subtract line 2 from line 1 and enter “6” on line 3

$0 to 13,000

10.0

of the worksheet and on Form W – 4, line 5.

Other amounts owed. If you expect to owe

13,001 to 31,000

6.7

John and Joyce Green can take a total of 6

31,001 to 64,000

3.7

amounts other than income tax, such as

64,001 to 94,000

3.3

withholding allowances between them. They de-

self-employment tax, include them on line 8. The

94,001 to 163,000

2.9

cide that John will take all 6 allowances on his

total is the additional withholding needed for the

over 163,000

2.6

Form W – 4. Joyce, therefore, cannot claim any

year.

allowances on hers. She will enter “0” on line 5

of the Form W – 4 she gives to her employer.

Example 1.2. You are married and expect

Example 1.3

to file a joint return for 2003. Your combined

Getting the Right Amount

estimated wages are $68,000. Your estimated

Joyce Green works in a bookstore and expects

of Tax Withheld

tax credits include a child and dependent care

to earn about $13,300. Her husband, John,

credit of $960 and a mortgage interest credit of

works full time at the Acme Corporation, where

In most situations, the tax withheld from your

$1,700.

his expected pay is $48,500. They file a joint

pay will be close to the tax you figure on your

In Credit Table A, the number for your com-

income tax return and claim exemptions for their

return if you follow these two rules.

bined estimated wages ($65,001 to $132,000) is

two children. Because they file jointly, they use

3.7. Multiply your total estimated tax credits of

only one set of Form W – 4 worksheets to figure

1) You accurately complete all the Form

$2,660 by 3.7. Add the result, $9,842, to the

the number of withholding allowances. The

W – 4 worksheets that apply to you.

amount you would otherwise show on line 5 of

Greens’ worksheets and John’s W – 4 are shown

2) You give your employer a new Form W – 4

on the next page.

the Deductions and Adjustments Worksheet

when changes occur.

and enter the total on line 5. Because you

Personal Allowances Worksheet. On this

choose to account for your child and dependent

But because the worksheets and withholding

worksheet, John and Joyce claim allowances for

care credit this way, you do not use line F of the

methods do not account for all possible situa-

themselves and their children by entering “1” on

Personal Allowances Worksheet.

tions, you may not be getting the right amount

line A, “1” on line C, and “2” on line D. Because

withheld. This is most likely to happen in the

both John and Joyce will receive wages of more

following situations.

Nonwage income (worksheet line 6). Enter

than $1,000, they are not entitled to the addi-

on line 6 your estimated total nonwage income

•

tional withholding allowance on line B. The

You are married and both you and your

(other than tax-exempt income). Nonwage in-

Greens expect to have child and dependent

spouse work.

come includes interest, dividends, net rental in-

care expenses of $2,400. They enter “1” on line

•

You have more than one job at a time.

come, unemployment compensation, alimony

F of the worksheet. Because they are married,

•

received, gambling winnings, prizes and

their total income will be between $20,000 and

You have nonwage income, such as inter-

awards, hobby income, capital gains, royalties,

$65,000 and they have two eligible children,

est, dividends, alimony, unemployment

they enter “2” on line G.

and partnership income.

compensation, or self-employment in-

They enter their total personal allowances, 7,

come.

If line 6 is more than line 5, you may not have

on line H.

enough income tax withheld from your wages.

•

You will owe additional amounts with your

See Getting the Right Amount of Tax Withheld,

Deductions and Adjustments Worksheet.

return, such as self-employment tax.

later.

Because they plan to itemize deductions and

•

Your withholding is based on obsolete

claim adjustments to income, the Greens use

Form W – 4 information for a substantial

Net deductions and adjustments (worksheet

this worksheet to see whether they are entitled

part of the year.

line 7). If line 7 is less than $3,000 enter “0” on

to additional allowances.

•

line 8. If line 7 is $3,000 or more, divide it by

The Greens’ estimated itemized deductions

Your earnings are more than $125,000 if

$3,000, drop any fraction, and enter the result on

total $11,300, which they enter on line 1 of the

you are single or $175,000 if you are mar-

line 8.

worksheet. Because they will file a joint return,

ried.

Chapter 1 Tax Withholding for 2003

Page 7

Publication 505 - Tax Withholding And Estimated Tax Page 7

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