Withholding calculations from new W-4P

[bompen]

I recently started a new annuity and was required to submit a W-4P for them to calculate my withholding.  For other annuities I have had I always had 12% deducted and never was required to submit any type of W-4 and usually received a refund at years end on my federal taxes.  I filled out the form as best I could, but when my I received my first annuity payment 31% federal tax had been withheld, way too much, severely impacting my monthly cash flow.  I have contacted IRS phone help and they do not have live support for this topic.  Does anyone know how the various numbers on the W-4P are used to calculate withholding so that I can put in appropriate numbers to get my withholding down to the 12% level?  Thanks in advance for you consideration and help.

[Anonymous_]

@Critter-3 

[TomD8]

Try using this IRS online tool:

Tax Withholding Estimator - About You | Internal Revenue Service (irs.gov)

[bompen]

It doesn't work for this form based on the withholding taken by the insurance company I have the annuity with.

[Critter-3]

OK ... you have to "trick" the form a bit since the option for a flat amount is no longer an option.

First click the MARRIED filing Jointly  status even if you are not married  then go down to line 4c and enter the amount you want withheld (12% if that is your choice).  Then see what they take out and if it is still too much or too little then adjust the amount on line 4c as needed.  

[Amanda_]

@bompen I had this exact question and realized that nothing is written from the perspective of the taxpayer on how the numbers on the W-4P are actually used. So, I started looking for instructions written for the employers. So far, I found Publication 15-T (2024), Federal Income Tax Withholding Methods, Section 1, 

Worksheet 1B. Payer’s Worksheet for Figuring Withholding From Periodic Pension or Annuity Payments https://www.irs.gov/publications/p15t#en_US_2024_publink100019110. 

I'm not sure why they think we'd be happy paying no attention to the man behind the curtain!