Form W-4P (2021)
Page 3
Note: The payer won’t withhold federal income tax if the entire
distribution is transferred by the plan administrator in a direct
rollover to a traditional IRA or another eligible retirement plan (if
allowed by the plan), such as a 401(k) plan, qualified pension
plan, governmental section 457(b) plan, section 403(b) contract,
or tax-sheltered annuity.
Distributions that are (a) required by federal law, (b) one of a
specified series of equal payments, or (c) qualifying “hardship”
distributions are not “eligible rollover distributions” and aren’t
subject to the mandatory 20% federal income tax withholding.
See Pub. 505 for details. See also Nonperiodic payments—10%
withholding on page 2.
Tax relief for victims of terrorist attacks. For tax years ending
after September 10, 2001, disability payments for injuries
incurred as a direct result of a terrorist attack directed against the
United States (or its allies), whether outside or within the United
States, aren’t included in income. You may check the box on line
1 of Form W-4P and submit the form to your payer to have no
federal income tax withheld from these disability payments.
However, you must include in your income any amounts that you
received or would’ve received in retirement had you not become
disabled as a result of a terrorist attack. See Pub. 3920, Tax
Relief for Victims of Terrorist Attacks, for more details.
Changing Your “No Withholding” Choice
Periodic payments. If you previously chose not to have federal
income tax withheld and you now want withholding, complete
another Form W-4P and submit it to your payer. If you want
federal income tax withheld at the 2021 default rate (married
with three allowances), write “Revoked” next to the checkbox
on line 1 of the form. If you want tax withheld at a different rate,
complete line 2 on the form.
Nonperiodic payments. If you previously chose not to have
federal income tax withheld and you now want withholding,
write “Revoked” next to the checkbox on line 1 and submit the
Form W-4P to your payer.
Payments to Foreign Persons and Payments
To Be Delivered Outside the United States
Unless you’re a nonresident alien, withholding (in the manner
described above) is required on any periodic or nonperiodic
payments that are to be delivered to you outside the United
States or its possessions. Don’t check the box on line 1 of Form
W-4P. See Pub. 505 for details.
In the absence of a tax treaty exemption, nonresident aliens,
nonresident alien beneficiaries, and foreign estates are generally
subject to a 30% federal withholding tax under section 1441 on
the taxable portion of a periodic or nonperiodic pension or
annuity payment that is from U.S. sources. However, most tax
treaties provide that private pensions and annuities are exempt
from withholding and tax. Also, payments from certain pension
plans are exempt from withholding even if no tax treaty applies.
See Pub. 515, Withholding of Tax on Nonresident Aliens and
Foreign Entities, and Pub. 519, U.S. Tax Guide for Aliens, for
details. A foreign person should submit Form W-8BEN,
Certificate of Foreign Status of Beneficial Owner for United
States Tax Withholding and Reporting (Individuals), to the payer
before receiving any payments. The Form W-8BEN must contain
the foreign person’s taxpayer identification number (TIN).
Statement of Federal Income Tax Withheld
From Your Pension or Annuity
By January 31 of next year, your payer will furnish a statement
to you on Form 1099-R, Distributions From Pensions, Annuities,
Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts,
etc., showing the total amount of your pension or annuity
payments and the total federal income tax withheld during the
year. If you’re a foreign person who has provided your payer
with Form W-8BEN, your payer will instead furnish a statement
to you on Form 1042-S, Foreign Person’s U.S. Source Income
Subject to Withholding, by March 15 of next year.
Specific Instructions
Personal Allowances Worksheet
Complete this worksheet on page 4 first to determine the
number of withholding allowances to claim.
Line C. Head of household please note: Generally, you can
claim head of household filing status on your tax return only if
you’re unmarried and pay more than 50% of the costs of
keeping up a home for yourself and a qualifying individual. See
Pub. 501 for more information about filing status.
Line D. Child tax credit. When you file your tax return, you may
be eligible to claim a child tax credit for each of your eligible
children. To qualify, the child must be under age 17 as of
December 31, must be your dependent who generally lives with
you for more than half the year, and must have the required SSN.
To learn more about this credit, see Pub. 972, Child Tax Credit
and Credit for Other Dependents. To reduce the tax withheld
from your payments by taking this credit into account, follow the
instructions on line D of the worksheet. On the worksheet, you
will be asked about your total income. For this purpose, total
income includes all of your pensions, wages, and other income,
including income earned by a spouse if you’re filing a joint return.
Line E. Credit for other dependents. When you file your tax
return, you may be eligible to claim a credit for other dependents
for whom a child tax credit can’t be claimed, such as a qualifying
child who does not meet the age or SSN requirement for the
child tax credit, or a qualifying relative. To learn more about this
credit, see Pub. 972. To reduce the tax withheld from your
payments by taking this credit into account, follow the
instructions on line E of the worksheet. On the worksheet, you
will be asked about your total income. For this purpose, total
income includes all of your pensions, wages, and other income,
including income earned by a spouse if you’re filing a joint return.
Line F. Other credits. You may be able to reduce the tax
withheld from your payments if you expect to claim other tax
credits, such as tax credits for education (discussed in Pub.
970). If you do so, your payments will be larger, but the amount
of any refund that you receive when you file your tax return will
be smaller. Follow the instructions for the worksheet for
converting credits to allowances in Pub. 505 if you want to
reduce your withholding by taking these credits into account. If
you figure all your credits using that worksheet in Pub. 505,
enter “-0-” on lines D and E.
Deductions, Adjustments, and Additional
Income Worksheet
Complete this worksheet to determine if you’re able to reduce
the tax withheld from your pension or annuity payments to
account for your itemized deductions and other adjustments to
income, such as deductible IRA contributions. If you do so, your
refund at the end of the year will be smaller, but your payments
will be larger. You’re not required to complete this worksheet or
reduce your withholding if you don’t wish to do so.
You can also use this worksheet to figure out how much to
increase the tax withheld from your payments if you have a large
amount of other income not subject to withholding, such as
interest, dividends, or capital gains.
Another option is to take these items into account and make
your withholding more accurate by using the estimator at
www.irs.gov/W4App. If you use the estimator, you don’t need to
complete any of the worksheets for Form W‐4P.
Multiple Pensions/More‐Than‐One‐Income
Worksheet
Complete this worksheet if you receive more than one pension,
if you have a pension and a job, or if you’re married filing jointly
and have a working spouse or a spouse who receives a
pension. If you don’t complete this worksheet, you might have
too little tax withheld. If so, you will generally owe tax when you
file your tax return and may be subject to a penalty.