3.   Credit for Withholding and Estimated Tax for 2013

Introduction

When you file your 2013 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 2013. These credits are subtracted from your total tax. Because these credits are refundable, 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.

Topics - This chapter discusses:

  • How to take credit for withholding,

  • How to take credit for estimated taxes you paid, and

  • How to take credit for excess social security, Medicare, or railroad retirement tax withholding.

Withholding

If you had income tax withheld during 2013, you generally should be sent a statement by January 31, 2014, 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.

Form W-2

Your employer is required to provide or send Form W-2 to you no later than January 31, 2014. You should receive a separate Form W-2 from each employer you worked for.

If you stopped working before the end of 2013, your employer could have given you your Form W-2 at any time after you stopped working. However, your employer must provide or send it to you by January 31, 2014.

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, contact your employer or payer to request a copy. If you still do not get the form by February 15, the IRS can help you by requesting the form from your employer. The phone number for the IRS is listed in chapter 5. You will be asked for the following information.

  • Your name, address, city and state, zip code, and social security number.

  • Your employer's name, address, city, state, zip code, and the employer's identification number (if known).

  • An estimate of the wages you earned, the federal income tax withheld, and the period you worked for that employer. The estimate should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible.

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. Total the federal income tax withheld (shown in box 2 of all Forms W-2 received) and enter that amount on the appropriate line of your tax return.

In addition, Form W-2 is used to report any taxable sick pay you received and any income tax withheld from your sick pay. Your sick pay may be combined with other wages in one Form W-2 or you may receive a separate Form W-2 for sick pay.

If you file a paper tax return, attach Copy B of Form W-2 to your return.

Form W-2G

If you had gambling winnings in 2013, 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 62 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 Form 1040.

File Form W-2G with your income tax return only if it shows any federal income tax withheld in box 2.

The 1099 Series

Most forms in the 1099 series are not filed with your return. In general, these forms should be furnished to you by January 31, 2014. Unless instructed to file any of these forms with your return, keep them for your records.

There are several different forms in this series, including:

  • Form 1099-B, Proceeds From Broker and Barter Exchange Transactions;

  • Form 1099-C, Cancellation of Debt;

  • Form 1099-DIV, Dividends and Distributions;

  • Form 1099-G, Certain Government Payments;

  • Form 1099-INT, Interest Income;

  • Form 1099-K, Payment Card and Third-Party Network Transactions;

  • Form 1099-MISC, Miscellaneous Income;

  • Form 1099-OID, Original Issue Discount;

  • Form 1099-PATR, Taxable Distributions Received From Cooperatives;

  • Form 1099-Q, Payments From Qualified Education Programs (Under Sections 529 and 530);

  • 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.

Reporting your withholding.   Report on your tax return all federal income tax withholding shown on your Form 1099, Form SSA-1099, and/or Form RRB-1099. Include the amount withheld in the total on line 62 of Form 1040, line 36 of Form 1040A, or line 7 of Form 1040EZ.

Form 1099-R.   Attach Form 1099-R to your paper return if federal income tax withholding is shown in box 4. Do not attach any other Form 1099.

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 have an “X” in the “CORRECTED” box at the top of the form. A special form, Form W-2c, Corrected Wage and Tax Statement, is used to correct a Form W-2.

In certain situations, you will receive two forms in place of the original incorrect form. This will happen when your taxpayer identification number is wrong or missing, your name and address are wrong, or you received the wrong type of form (for example, a Form 1099-DIV instead of a Form 1099-INT). One new form you receive will be the same incorrect form or have the same incorrect information, but all money amounts will be zero. This form will have an “X” in the “CORRECTED” box at the top of the form. The second new form should have all the correct information, prepared as though it is the original (the “CORRECTED” box will not be checked).

Form Received After Filing

If you file your return and you later receive a form for income that you did not include on your return, report the income and take credit for any income tax withheld by filing Form 1040X, Amended U.S. Individual Income Tax Return.

Separate Returns

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.

Community property states.   The following are community property states.
  • Arizona.

  • California.

  • Idaho.

  • Louisiana.

  • Nevada.

  • New Mexico.

  • Texas.

  • Washington.

  • Wisconsin.

Generally, if you live in a community property state and file a separate return, you and your spouse each must report half of all community income in addition to your own separate income. If you are required to report half of all community income, you are entitled to take 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.

Fiscal Years (FY)

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.

Fiscal year withholding.    You can claim credit on your tax return only for the tax withheld during the calendar year (CY) ending within 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 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.

Example.

Miles Hanson files his return for a fiscal year ending June 30, 2013. In January 2013, he received a Form W-2 that showed that his wages for 2012 were $31,200 and that his income tax withheld was $3,380. His records show that he had received $15,000 of the wages by June 30, 2012, and $16,200 from July 1 through December 31, 2012. See Table 3-1 .

On his return for the fiscal year ending June 30, 2013, Miles will report the $16,200 he was paid in July through December of 2012, plus the $18,850 he was paid during the rest of the fiscal year, January 1, 2013, through June 30, 2013. However, he takes credit for all $3,380 that was withheld during 2012.

On his return for the fiscal year ending June 30, 2012, he reported the $15,000 he was paid in January through June 2012, but took no credit for the tax withheld during that time. On his return for the fiscal year ending June 30, 2014, he will take the credit for any tax withheld during 2013 but not for any tax withheld during 2014.

Table 3-1.Example for Fiscal Year Ending June 30, 2013—Miles Hanson

Date Form W-2 Miles' records Tax return for FY ending 6/30/20121 Tax return for FY ending 6/30/2013
Wages With- 
holding
Wages With- 
holding
Wages With- 
holding
Wages With- 
holding
CY 20122 $31,200 $3,380            
1/1/2012 –  
6/30/2012
    $15,000 $1,600 $15,000      
7/1/2012 –  
12/31/2012
    $16,200 $1,780     $16,200 $3,380
CY 2013 $37,700 $4,316 3            
1/1/2013 –  
6/30/2013
    $18,850 $2,158     $18,850  
7/1/2013 –  
12/31/2013
    $18,850 4 $2,158        
1 Miles' tax return for FY ending 6/30/2012 also included his wages for 7/1–12/31/2011 and the withholding shown on his 2011 Form W-2. 
2
Calendar year (January 1 – December 31). 
3 Withholding shown on 2013 Form W-2 ($4,316) will be included in Miles' tax return for FY ending 6/30/2014, the fiscal year in which calendar year 2013 ends. 
4 Wages for 7/1–12/31/2013 ($18,850) will be included in Miles' tax return for FY ending 6/30/2014, the fiscal year in which the wages were received.

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 income.

Example.

Emily Smith's records show that she received income in November 2013 and February 2014 from which there was backup withholding ($100 and $50, respectively). Emily takes credit for the entire $150 of backup withholding on her tax return for the fiscal year ending September 30, 2014.

Estimated Tax

Take credit for all your estimated tax payments for 2013 on line 63 of Form 1040 or line 37 of Form 1040A. Include any overpayment from 2012 that you had credited to your 2013 estimated tax. You must use Form 1040 or Form 1040A if you paid estimated tax. You cannot file Form 1040EZ.

If you were a beneficiary of an estate or trust, you should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc., from the fiduciary. If you have estimated taxes credited to you from the estate or trust (from Schedule K-1 (Form 1041)), you must report the estimated taxes on Schedule E (Form 1040). On the dotted line next to the entry space for line 37 of Schedule E (Form 1040), enter “ES payment claimed” and the amount. However, do not include this amount in the total on line 37. Instead, enter the amount on Form 1040, line 63. This estimated tax payment for 2013 is treated as being made by you on January 15, 2014.

Name changed.   If you changed your name, and you made estimated tax payments using your former name, attach a statement to the front of your paper tax return indicating:
  • When you made the payments,

  • The amount of each payment,

  • Your name when you made the payments, and

  • The social security number under which you made the payments.

 
The statement should cover payments you made jointly with your spouse as well as any you made separately.

  Be sure to report the change to your local Social Security Administration office before filing your 2014 tax return. This prevents delays in processing your return and issuing refunds. It also safeguards your future social security benefits. For more information, call the Social Security Administration at 1-800-772-1213.

Separate Returns

If you and your spouse made separate estimated tax payments for 2013 and you file separate returns, you can take credit only for your own payments.

If you made joint estimated tax payments, you must decide how to divide the payments between your returns. One of you can claim all of the estimated tax paid and the other none, or you can divide it in any other way you agree on. If you cannot agree, you must divide the payments in proportion to each spouse's individual tax as shown on your separate returns for 2013.

Example.

James and Evelyn Brown made joint estimated tax payments for 2013 totaling $3,000. They file separate 2013 Forms 1040. James' tax is $4,000 and Evelyn's is $1,000. If they do not agree on how to divide the $3,000, they must divide it proportionately between their returns. Because James' tax ($4,000) is 80% of the total tax ($5,000), his share of the estimated tax is $2,400 (80% of $3,000). The balance, $600 (20% of $3,000), is Evelyn's share.

Divorced Taxpayers

If you made joint estimated tax payments for 2013 and you were divorced during the year, either you or your former spouse can claim all of the joint payments, or you each can claim part of them. If you cannot agree on how to divide the payments, you must divide them in proportion to each spouse's individual tax as shown on your separate returns for 2013. See Example earlier under Separate Returns.

If you claim any of the joint payments on your tax return, enter your former spouse's social security number (SSN) in the space provided at the top of page 1 of Form 1040 or Form 1040A. If you divorced and remarried in 2013, enter your present spouse's SSN in that space. Enter your former spouse's SSN, followed by “DIV,” under Payments to the left of Form 1040, line 63, or in the blank space to the left of Form 1040A, line 37.

Excess Social Security or Railroad Retirement Tax Withholding

Most employers must withhold social security tax from your wages. In some cases, however, the federal government and state and local governments do not have to withhold social security tax from their employees' wages. If you work for a railroad employer, that employer must withhold tier 1 railroad retirement (RRTA) tax and tier 2 RRTA tax.

Two or more employers.   If you worked for two or more employers in 2013, too much social security tax or tier 1 RRTA tax may have been withheld from your pay. You may be able to claim the excess as a credit against your income tax when you file your return. Table 3-2 shows the maximum amount that should have been withheld for any of these taxes for 2013. Figure the excess withholding on the appropriate worksheet.

  

Table 3-2. Maximum Social Security and RRTA Withholding for 2013

Type of tax Maximum 
wages 
subject 
to tax
Tax rate Maximum 
tax to be 
withheld
Social security $113,700 6.2% $7,049.40
Tier 1 RRTA $113,700 6.2% $7,049.40
Tier 2 RRTA $84,300 4.4% $3,709.20

Joint returns.   If you are filing a joint return, you and your spouse must figure any excess social security or tier 1 RRTA separately.

Note.

All wages are subject to Medicare tax withholding.

Employer's error.   If you had only one employer and he or she withheld too much social security, Medicare, or tier 1 RRTA tax, ask the employer to refund the excess amount to you. If the employer refuses to refund the overcollection, ask for a statement indicating the amount of the overcollection to support your claim. File a claim for refund using Form 843, Claim for Refund and Request for Abatement.

Worksheet for Nonrailroad Employees

If you did not work for a railroad during 2013, figure the excess social security withholding on Worksheet 3-1.

Note.

If you worked for both a railroad employer and a nonrailroad employer, use Worksheet 3-2, to figure excess social security and tier 1 RRTA tax.

Where to claim credit for excess social security withholding.   If you file Form 1040, enter the excess on line 69.

  If you file Form 1040A, include the excess in the total on line 41. Write “Excess SST” and show the amount of the credit in the space to the left of the line.

  You cannot claim excess social security tax withholding on Form 1040EZ.

Worksheets for Railroad Employees

If you worked for a railroad during 2013, figure your excess withholding on Worksheet 3-2 and 3-3, as appropriate.

Where to claim credit for excess tier 1 RRTA withholding.   If you file Form 1040, enter the excess on line 69.

  If you file Form 1040A, include the excess in the total on line 41. Write “Excess SST” and show the amount of the credit in the space to the left of the line.

  You cannot claim excess tier 1 RRTA withholding on Form 1040EZ.

How to claim refund of excess tier 2 RRTA.   To claim a refund of tier 2 tax, use Form 843. Be sure to attach a copy of all of your Forms W-2.

  See Worksheet 3-3 and the Instructions for Form 843, for more details.

Worksheet 3-1.Excess Social Security—Nonrailroad Employees

1. Add all social security tax withheld (but not more than  
$7,049.40 for each employer). This tax should be shown  
in box 4 of your Forms W-2. Enter the total here
1.  
2. Enter any uncollected social security tax on tips or group-term life insurance on Form 1040, line 60, identified by “UT 2.  
3. Add lines 1 and 2. If $7,049.40 or less, stop here. You cannot claim the credit 3.  
4. Social security limit 4. $7,049.40
5. Excess. Subtract line 4 from line 3 5.  

Worksheet 3-2.Excess Social Security and Tier 1 RRTA—Railroad Employees

1. Add all social security and tier 1 RRTA tax withheld (but not more than $7,049.40 for each employer). Social security tax should be shown in box 4 and tier 1 RRTA should be shown  
in box 14 of your Forms W-2. Enter the total here
1.  
2. Enter any uncollected social security and tier 1 RRTA tax on tips or group-term life insurance on Form 1040, line 60, identified by “UT 2.  
3. Add lines 1 and 2. If $7,049.40 or less, stop here. You cannot claim the credit 3.  
4. Social security and tier 1 RRTA tax limit 4. $7,049.40
5. Excess. Subtract line 4 from line 3 5.  

Worksheet 3-3.Excess Tier 2 RRTA—Railroad Employees

1. Add all tier 2 RRTA tax withheld (but not more than $3,709.20 for each employer). Box 14 of your Forms W-2 should show tier 2 RRTA tax. Enter the total here 1.  
2. Enter any uncollected tier 2 RRTA tax on tips or group-term life insurance on Form 1040, line 60, identified by “UT 2.  
3. Add lines 1 and 2. If $3,709.20 or less, stop here. You cannot claim the credit. 3.  
4. Tier 2 RRTA tax limit 4. $3,709.20
5. Excess. Subtract line 4 from line 3. 5.  


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