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Taxmap/pubs/p505-017.htm#TXMP72c1abe9 Chapter 3 Credit for Withholding and Estimated Tax for 2004

Credit for Withholding and Estimated Tax for 2004

Taxmap/pubs/p505-017.htm#TXMP40a3126a What's New

Taxmap/pubs/p505-017.htm#TXMP7c4d021c
Excess social security or railroad retirement tax withholding.

You can claim a credit for excess social security or tier 1 railroad retirement tax withholding for 2004 only if your total wages from two or more employers were more than $87,900.

Introduction

When you file your 2004 income tax return, take credit for all the income tax and excess social security or railroad retirement tax withheld from your salary, wages, pensions, etc. Also, take credit for the estimated tax you paid for 2004. These credits are subtracted from your tax. You should file a return and claim these credits, even if you do not owe tax.

If the total of your withholding and your estimated tax payments for any payment period is less than the amount you needed to pay by the due date for that period, you may be charged a penalty, even if the total of these credits is more than your tax for the year.

Taxmap/pubs/p505-017.htm#TXMP6709fe22 Withholding

Withholding

If you had income tax withheld during 2004, you should receive a statement by January 31, 2005, showing your income and the tax withheld. Depending on the source of your income, you will receive:

• Form W-2, Wage and Tax Statement,
• Form W-2G, Certain Gambling Winnings, or
• A form in the 1099 series.

Taxmap/pubs/p505-017.htm#TXMP470a7c46 Forms W-2 and W-2G.

You file Form W-2 with your income tax return. File Form W-2G with your return if it shows any federal income tax withheld from your winnings.

You should get at least two copies of each form you receive. Attach one copy to the front of your federal income tax return. Keep one copy for your records. You should also receive copies to file with your state and local returns.

Taxmap/pubs/p505-017.htm#TXMP50fcc6c3 Form W-2

FW2

Your employer should give you a Form W-2 for 2004 by January 31, 2005. You should receive a separate Form W-2 from each employer you worked for.

If you stopped working before the end of the year, your employer could have given you your Form W-2 at any time after you stopped working. However, your employer must give it to you by January 31, 2005.

If you ask for the form, your employer must send it to you within 30 days after receiving your written request or within 30 days after your final wage payment, whichever is later.

If you have not received your Form W-2 by January 31, 2005, you should ask your employer for it. If you do not receive it by February 15, call the IRS. The number is listed in the Form 1040, Form 1040A, and Form 1040EZ instructions. You will be asked for the following information:

• Your employer's name, address, and telephone number, and, if known, your employer's identification number.
• Your address, social security number, and daytime telephone number.
• The dates of employment.
• An estimate of your total wages and federal income tax withheld.

Form W-2 shows your total pay and other compensation and the income tax, social security tax, and Medicare tax that was withheld during the year. Include the federal income tax withheld (as shown on Form W-2) on:

• Line 63, if you file Form 1040,
• Line 39, if you file Form 1040A, or
• Line 7, if you file Form 1040EZ.

Form W-2 is also used to report any taxable sick pay you received and any income tax withheld from your sick pay.

Taxmap/pubs/p505-017.htm#TXMP38875472 Form W-2G

FW2G

If you had gambling winnings in 2004, the payer may have withheld income tax. If tax was withheld, the payer will give you a Form W-2G showing the amount you won and the amount of tax withheld.

Report the amounts you won on line 21 of Form 1040. Take credit for the tax withheld on line 63 of Form 1040. If you had gambling winnings, you must use Form 1040; you cannot use Form 1040A or Form 1040EZ.

Gambling losses can be deducted on Schedule A (Form 1040) as a miscellaneous itemized deduction. However, you cannot deduct more than the gambling winnings you report on line 21.

Taxmap/pubs/p505-017.htm#TXMP4349ef50 The 1099 Series

1099 Series

Most forms in the 1099 series are not filed with your return. You should receive these forms by January 31, 2005. Keep these forms for your records. There are several different forms in this series, including:

• Form 1099-B, Proceeds From Broker and Barter Exchange Transactions,
• Form 1099-DIV, Dividends and Distributions,
• Form 1099-INT, Interest Income,
• Form 1099-MISC, Miscellaneous Income,
• Form 1099-OID, Original Issue Discount,
• Form 1099-Q, Payments From Qualified Education Programs,
• Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.,
• Form SSA-1099, Social Security Benefit Statement, and
• Form RRB-1099, Payments by the Railroad Retirement Board.

If you received the types of income reported on some forms in the 1099 series, you may not be able to use Form 1040A or Form 1040EZ. See the instructions to these forms for details.

Taxmap/pubs/p505-017.htm#TXMP35107db7 Form 1099-R.

Attach Form 1099-R to your return if federal income tax withholding is shown in box 4. Include the amount withheld in the total on line 63 of Form 1040, or on line 39 of Form 1040A. You cannot use Form 1040EZ if you received payments reported on Form 1099-R.

Taxmap/pubs/p505-017.htm#TXMP37cc14e3 Backup withholding.

If you were subject to backup withholding on income you received during 2004, include the amount withheld, as shown on your Form 1099, in the total on line 63 of Form 1040, or line 39 of Form 1040A.

Taxmap/pubs/p505-017.htm#TXMP19b1640c Form Not Correct

If you receive a form with incorrect information, you should ask the payer for a corrected form. Call the telephone number or write to the address given for the payer on the form. The corrected Form W-2G or Form 1099 you receive will be marked "Corrected." A special form, Form W-2c, Corrected Wage and Tax Statement, is used to correct a Form W-2.

Taxmap/pubs/p505-017.htm#TXMP6295a2e9 Form Received After Filing

Amended Return

If you file your return and you later receive a form for income that you did not include on your return, you should report the income and take credit for any income tax withheld by filing Form 1040X.

Taxmap/pubs/p505-017.htm#TXMP53fb2764 Separate Returns

Separate Return

If you are married but file a separate return, you can take credit only for the tax withheld from your own income. Do not include any amount withheld from your spouse's income. However, different rules may apply if you live in a community property state.

Taxmap/pubs/p505-017.htm#TXMP1ee11ec8 Community property states.

The following are community property states.

• Arizona,
• California,
• Idaho,
• Louisiana,
• Nevada,
• New Mexico,
• Texas,
• Washington, and
• Wisconsin.

If you live in a community property state and file a separate return, you and your spouse must each report half of all community income in addition to your own separate income. Each of you takes credit for half of all taxes withheld on the community income. If you were divorced during the year, each of you generally must report half the community income and can take credit for half the withholding on that community income for the period before the divorce.

For more information on these rules, and some exceptions, see Publication 555, Community Property.

Taxmap/pubs/p505-017.htm#TXMP408e0a21 Fiscal Years

Fiscal Year

If you file your tax return on the basis of a fiscal year (a 12-month period ending on the last day of any month except December), you must follow special rules, described below, to determine your credit for federal income tax withholding.

Taxmap/pubs/p505-017.htm#TXMP212c425b Normal withholding.

You can claim credit on your tax return only for the tax withheld during the calendar year ending in your fiscal year. You cannot claim credit for any of the tax withheld during the calendar year beginning in your fiscal year. You will be able to claim credit for that withholding on your return for your next fiscal year.

The Form W-2 or 1099-R you receive for the calendar year that ends during your fiscal year will show the tax withheld and the income you received during that calendar year.

Although you take credit for all the withheld tax shown on the form, report only the part of the income shown on the form that you received during your fiscal year. Add to that the income you received during the rest of your fiscal year.

Taxmap/pubs/p505-017.htm#TXMP0c6635bb
Example 3.1.

Miles Hanson files his return for a fiscal year ending June 30, 2004. In January 2004, he received a Form W-2 that showed that his wages for 2003 were $15,600 and that his income tax withheld was $1,409.40. His records show that he had received $7,500 of the wages by June 30, 2003, and $8,100 from July 1 through December 31, 2003.

On his return for the fiscal year ending June 30, 2004, Miles will report the $8,100 he was paid in July through December of 2003, plus whatever he was paid during the rest of the fiscal year, January 1, 2004, to June 30, 2004. However, he takes credit for all $1,409.40 that was withheld during 2003. On his return for the fiscal year ending June 30, 2005, he can take credit for any tax withheld during 2004 but not for any tax withheld during 2005.

On his return for the fiscal year ending June 30, 2006, Miles takes credit for any income tax withheld in 2005.

Taxmap/pubs/p505-017.htm#TXMP4ac6e572 Backup withholding.

If income tax has been withheld under the backup withholding rule, take credit for it on your tax return for the fiscal year in which you received the payment.

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Example 3.2.

Emily Smith's records show that she received income in February 2005 from which $50 was withheld under the backup withholding rule. On her tax return for the fiscal year ending June 30, 2005, Emily takes credit for withheld income tax of $50.

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