W-4P

[Elkhorn40]

My wife and I are both 55, still working, and I just began receiving a monthly pension that is less than the amount I/we make from our jobs. So what do I put down in Step 2(b)(i) and so on? How do I get the correct amount of federal tax taken out of my pension payments?

Thanks for the help!

[JosephS1]

Several ways to accomplish this.  The line item you refer to on the W-4P wants to know the total you believe you will earn from both jobs for 2023.  Enter that total amount and continue.  While line (ii) asks for other lower pension amounts, my suggestion is to add both of what you are receiving as pension income to be sure not to be underwithheld.  Lines 3-4(b) need not be filled in and if you desire additional withholding enter that amount on line 4(c).

Now that we are all thoroughly confused by the new W-4's, there is another method that may give you a more accurate withholding calculation.  At the IRS website, at the W-4 screen they have a withholding tax calculator.  It is meant generally for people who are not collecting a pension but the pension income can be entered as a general "other" income item and the associated withholding as additional tax payments.  The total calculation and resulting withholding amounts take about 20 minutes to fill out but many have said it is worth the time.  I have given you a link below to the calculator.

You will find the calculator under the caption "Other Items You May Find Useful" and it is the third item in that list.

W-4 Instructions

@Elkhorn40 

[mjm77]

Need help with completing the W-4P Pension form.  I just applied for my pension and need to fill out this form.  My husband is working and will make more money than my pension.  Do I put his gross taxable earnings from his W2 on Step 2b(i).  Where do I list my pension amount?   Thank you.

[JohnW152]

Yes, put your husband's projected earnings from Box 1 of Form W-2 in (b)(i) of Step 2, minus the deductions noted on the line.  If you can't project the earnings, just use the amount from his most recent Form W-2.

You actually don't need to list your own pension amount on the form. The form only needs the income in Step 2 as a baseline so your employer can compute what your pension withholding should be. 

Your employer has your pension amount information, and will calculate your pension withholding based on what you've included on Form W-4P and the pension information it has.

@mjm77