Tip:

Consider advising payees to use the IRS Tax Withholding Estimator, available at IRS.gov/W4App , when completing Form W-4P if they are submitting Form W-4P after the beginning of the year; have social security, dividend, capital gain, or business income; receive these payments or pension and annuity payments for only part of the year; are subject to the Additional Medicare Tax or Net Investment Income Tax; or have changes during the year to their marital status, number of pensions/jobs (including their spouse if married filing jointly), or number of dependents.

Step 3.

Payers use the amount on this line as an annual reduction in the amount of withholding. Payers should use the amount the payee entered as the total in Step 3 of Form W-4P even if it is not equal to the sum of any amounts entered on the left in Step 3 because the total may take into account other tax credits. If the Step 3 total is blank, but there are amounts entered in Step 3(a), 3(b) or 3(c), the payer may ask the payee if leaving the line blank was intentional.

Steps 4(a) and 4(b).

Payers increase the annual amount of pension/annuity payments subject to income tax withholding by the annual amount shown in Step 4(a) and reduce the annual amount of pension/annuity payments subject to income tax withholding by the annual amount shown in Step 4(b).

Step 4(c).

Payers will increase withholding on each payment by the tax amount in Step 4(c).

Payee fails to furnish Form W-4P or provides an incorrect SSN on Form W-4P.

In the case of a payer using a 2022 or later Form W-4P, a payee who received the first periodic pension or annuity payment after 2021 but who fails to furnish a 2022 or later Form W-4P or fails to provide a correct SSN on a 2022 or later Form W-4P will be treated as if they had checked the box for “Single” in Step 1 and had no entries in Step 2, Step 3, and Step 4 of a 2022 or later Form W-4P. In the case of a payer that used the 2021 Form W-4P for 2022 and hasn’t received a 2022 or later Form W-4P, a payee who received the first periodic pension or annuity payment in 2022 but who failed to furnish such a 2021 Form W-4P will continue be treated as if they had no entries on lines 1 and 3 and completed line 2 indicating a status of Married, and claiming 3 allowances. In the case of a payer that used the 2021 Form W-4P and hasn’t received a 2022 or later Form W-4P, a payee who received the first periodic pension or annuity payment in 2022 but who failed to provide a correct SSN on the 2021 Form W-4P will continue to be treated as if they had no entries on lines 1 and 3 and had completed line 2 indicating a status of Single, and claiming zero allowances. If a payee received their first periodic pension or annuity payment before 2022 and had failed to furnish a Form W-4P when those payments began, you must continue to withhold on those periodic payments as if the recipient were married claiming three withholding allowances on a Form W-4P for 2021 or earlier, unless the payee furnishes a Form W-4P requesting a change in withholding. If a payee is treated as married claiming three withholding allowances on a 2021 or earlier Form W-4P, tax will be withheld on a payment that is at least $2,690 per month.

Choosing not to have income tax withheld.

A payee who checks the box for “No withholding” on a 2026 or later Form W-4P below Step 4(c) shall have no federal income tax withheld from their periodic pension or annuity payments. On a 2022 through 2025 Form W-4P, the payee would have made this election by writing “No Withholding” below Step 4(c). In the case of a payer that used the 2021 Form W-4P for 2022, a payee who checked the box of line 1 of the 2021 Form W-4P shall have no federal income tax withheld from their periodic pension or annuity payments. Regardless of the Form W-4P used, generally a payee who is a U.S. citizen or a resident alien isn’t permitted to elect no withholding on payments that are to be delivered outside of the United States or its territories.

Withholding on periodic pension and annuity payments to nonresident aliens and foreign estates.

Withholding methods on periodic pension and annuity payments discussed in this publication don’t apply to nonresident aliens and foreign estates. See Pub. 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, for more information.