By Payroll and Entitlements Editorial Staff
The IRS has issued interim guidance for the 2020 calendar year on income tax withholding from periodic payments for pensions, annuities, and certain other deferred income under Code Sec. 3405(a). Under the guidance:
- information requested for periodic payments on the 2020 Form W-4P, Withholding Certificate for Pension or Annuity Payments, will generally continue to parallel the information requested on Form W-4 prior to 2020 (other than the no-withholding election on Line 1);
- payees of periodic payments can use either the Form W-4P worksheets or the IRS Tax Withholding Estimator (www.irs.gov/W4App) to determine their entries on 2020 Form W-4P; and
- certain withholding tables and computational procedures in the new 2020 Publication 15-T, Federal Income Tax Withholding Methods, that apply to a 2019 or earlier Form W-4 will also work with the 2020 Form W-4P.
The guidance also includes the withholding rules for when the payee has not furnished a withholding certificate to the payor (i.e., the "default" rate of withholding).
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