Form W-4P – Withholding Certificate for Pension or Annuity Payments is a simple tax form, similar to Form W-4 – Employee’s Withholding Certificate. Form W-4P 2021 is out and you can fill out one to let the payer know how much federal income tax needs to be withheld.
The purpose of Form W-4P is to provide the payer with information for accurate federal income tax withholding. If you participate in pensions, annuities, and other deferred compensation, Form W-4P will provide the payer with what needs to be known for accurate federal income tax withholding.
Having that said, if you earn income through pensions or any other form of payment as stated above, fill out Form W-4P to provide the payer with the necessary information so that tax withheld from your income isn’t too much or little.
Fill out Form W-4P below and print out a paper copy or download it as a PDF and fill out on your computer and save it.
You aren’t required to send or mail Form W-4P to the Internal Revenue Service. You will simply fill out Form W-4P and hand it to the payer.
How many allowances to claim on Form W-4P?
Unlike 2021 Form W-4 which was updated last year where allowances were removed, Form W-4P still has allowances where you need to claim to adjust taxes withheld.
To figure out how many allowances to claim on Form W-4P, use the personal allowances worksheet. This should help you with that. As a general rule, most taxpayers claim “0” if they’re single or “1” if filing a joint return, and an additional allowance for each dependent.
How to claim exemption on Form W-4P?
To be tax-exempt from withholding, enter your personal information as is and leave lines 5 and 6 blank. On Line 7 of 2021 Form W-4P, enter “Exempt”. This is how you claim an exemption from tax withholding.