Hi! I currently receive income from pension, SS, and 401k. Even with 7% withheld from my pension in federal income tax, I owe around $2K each year. How do I calculate what percentage of income tax should be withheld?
To be accurate, you should submit a 2022 Form W-2P for all pensions/annuities.
Form W-4P Withholding Certificate for Periodic Pension or Annuity Payments
Please see page 2, Example 2 for the largest pension; Example 3 for the smaller pensions.
Alternatively, you can use the most accurate way.
IRS Tax Withholding Estimator
Or make it simpler, since you know with the current withholdings, you have a balance due approx. $2K per year, you can pay estimated tax payment on your own to cover the shortage.
Form 1040-ES, Estimated Tax for Individuals
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 https://www.irs.gov/payments
IRS Direct Pay – for online transfer directly from your checking or savings account at no cost to you.
Pay by card – To pay by debit or credit card. A convenience fee is charged by these service providers.
Hope the above helps.
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