Withholding

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?

701

Expert Alumni

Jul 27, 2022 9:21:39 AM

Hi DLottcs,

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

https://www.irs.gov/pub/irs-pdf/fw4p.pdf

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

https://www.irs.gov/individuals/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

https://www.irs.gov/pub/irs-pdf/f1040es.pdf

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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Withholding