The Maryland Tax 766 form is a vital document for retirees in Maryland, used to request federal and state tax withholding from pension payments. This form combines both federal and Maryland state tax withholding elections, revoking any prior requests. Completing this form accurately ensures that your tax withholdings align with your financial situation, so take action now by filling out the form below.
The Maryland Tax 766 form is an essential document for retirees receiving pension allowances from the Maryland State Retirement and Pension System. This form combines federal and state tax withholding requests, ensuring that retirees can manage their tax obligations efficiently. When completing this form, individuals must understand that submitting a new request will revoke any prior tax withholding elections they have made. The first section of the form focuses on federal tax withholding, where retirees can indicate their desired number of withholding allowances or choose not to have any federal income tax withheld. Additionally, they can specify an extra amount to be deducted from their payments if needed. The second section addresses Maryland state income tax withholding, allowing retirees to opt out of withholding or to designate a specific dollar amount to be withheld from their monthly pension payments. It is crucial for retirees to read the instructions carefully, as any changes to their withholding choices can be made at any time by submitting a new request. Understanding the implications of these choices can help retirees avoid potential tax liabilities and ensure they receive their pension payments in a manner that aligns with their financial planning.
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MARYLAND STATE RETIREMENT AGENCY
VSP
120 EAST BALTIMORE STREET
BALTIMORE, MARYLAND 21202-6700
FEDERAL AND MARYLAND STATE TAX WITHHOLDING REQUEST
FOR PENSION ALLOWANCE
You must file one combined form covering both your Federal and State tax withholding elections. This form revokes all prior Federal and State tax withholding elections. For example, if you previously requested Federal and State tax withholdings and now submit a new request indicating only State tax, the SRA shall delete your prior Federal tax withholdings.
PART I – FEDERAL TAX WITHHOLDING CERTIFICATE
If you want federal income tax to be withheld, you must designate the number of withholding allowances on line 2 of Form W-4P. Under current federal law, you cannot only designate a specific dollar amount to be withheld. However, you can designate an additional amount to be withheld on line 3 below. If you do not want any federal income tax withheld from your periodic payments, check the box on line 1 of Form W-4P. If you do not submit Form W-4P, the Agency must withhold periodic payments as if you are married claiming 3 exemptions.
Form W-4P
Withholding Certificate for
20__
Department of the Treasury
Pension or Annuity Payments
Internal Revenue Service
Type or print your first name and middle initial
Last name
Your social security number
:
Home address (number and street or rural route)
Claim or identification number (if
any) of your pension or annuity
contract
City or town, state, and ZIP code
Complete the following applicable lines.
►
1 Check here if you do not want any federal income tax withheld from your pension or annuity. (Do not complete lines 2 or 3.)
2 Total number of allowances and marital status you are claiming for withholding from each periodic pension or annuity
payment. (You may also designate an additional dollar amount on line 3.)
Marital status:
Single
Married
Married, but withhold at higher “Single” rate
(Enter number
of allowances.)
3 Additional amount, if any, you want withheld from each pension or annuity payment. (Note. For periodic payments,
► $
you cannot enter an amount here without entering the number (including zero) of allowances on line 2.). . . .
. . . . . .
YOUR SIGNATURE
DATE
THIS FORM IS NOT VALID UNLESS YOU SIGN IT.
Form W-4P (2010)
PART II – MARYLAND STATE INCOME TAX WITHHOLDING REQUEST
Please check the appropriate block indicating your election. Check only one.
1.[ ] I am NOT a Maryland resident. Do not withhold Maryland income tax.
2.[ ] I AM a Maryland resident but I do not wish to have Maryland income tax withheld.
3.[ ] Withhold Maryland income tax from each monthly pension payment the following whole dollar
amount:
$
.xx
Return this form to the Maryland State Retirement Agency at the address above.
Your Signature
Date
Daytime Phone #: (
)
IT IS IMPORTANT THAT YOU CAREFULLY READ THE REVERSE SIDE OF THIS FORM.
THIS FORM IS NOT VALID UNLESS YOU SIGN.
FORM 766 (Rev. 1/2010)
2
Part I
FEDERAL INCOME TAX WITHHOLDING
The monthly retirement payments you receive from the Maryland State Retirement and Pension System may be subject to Federal income tax withholding. For further information, please refer to Internal Revenue Service Publication 575 regarding the taxability of pension and annuity income.
As a retiree, the following Federal income tax withholding alternatives are available to you:
1.You may elect not to have Federal income tax deducted from your monthly retirement payment, or
2.You may claim a certain number of exemptions and have the Maryland State Retirement and Pension System deduct the appropriate amount, if any, in accordance with the Federal income tax tables and you may designate an additional specific whole dollar amount to be withheld from your monthly retirement payment.
If you elect not to have Federal withholding apply to your monthly retirement payments, or if you do not have enough Federal income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the Internal Revenue Service estimated tax rules if your withholding and estimated tax payment are not sufficient. New retirees, especially, should see IRS Publication 505.
Part II
MARYLAND STATE INCOME TAX WITHHOLDING
The monthly retirement payments you receive from the Maryland State Retirement and Pension System may be subject to Maryland income tax withholding.
As a retiree and a Maryland resident, the following Maryland income tax withholding alternatives are available to you:
1.You may elect not to have Maryland income tax deducted from your monthly retirement payment, or
2.You may designate a specific whole dollar amount to be withheld from your monthly retirement payment.
If you elect not to have Maryland withholding apply to your monthly retirement payments, or if you do not have enough Maryland income tax withheld, you may be responsible for payment of estimated tax.
An election of any one of the alternatives will remain in effect until you revoke it. You may revoke or change your election at any time by filing a new Federal and Maryland State Tax Withholding Request.
The Maryland State Retirement Agency can not assist you in the preparation of tax returns. Please contact the Internal Revenue Service at 1-800-829-1040, the Comptroller’s Taxpayer Service Information Line at 410-260- 7980 (in Central Maryland) or 1-800-638-2937, or a tax consultant for any assistance.
To receive additional copies of the Federal and Maryland State Tax Withholding Request form, or for other information concerning your retirement benefits, call 410-625-5555, or toll free in Maryland 1-800-492-5909, or visit our website at www.sra.state.md.us.
SEE REVERSE SIDE FOR FEDERAL AND MARYLAND STATE TAX WITHHOLDING REQUEST
Additional Instructions:
Section references are to the Internal Revenue Code. Agency refers to the Maryland State Retirement Agency.
When should I complete the form? Complete Form W-4P and give it to the payer as soon as possible. Get Pub. 919, How Do I Adjust My Tax Withholding, to see how the dollar amount you are having withheld compares to your projected total federal income tax for 2010. You may also use the Withholding Calculator on the IRS website at www.irs.gov/individuals for help in determining how many withholding allowances to claim on your Form W-4P.
Other income. If you have a large amount of income from other sources not subject to withholding (such as interest, dividends, or capital gains), consider making estimated tax payments using Form 1040-ES, Estimated Tax for Individuals. Call 1-800-TAX- FORM (1-800-829-3676) to get Form 1040-ES and Pub. 505, Tax Withholding and Estimated Tax. You can also get forms and publications from the IRS website at www.irs.gov.
Withholding From Pensions and Annuities
Generally, federal income tax withholding applies to the taxable part of payments made from pension, profit-sharing, stock bonus, annuity, and certain deferred compensation plans; from individual retirement arrangements (IRAs); and from commercial annuities. The method and rate of withholding depends on (a) the kind of payment you receive, (b) whether the payments are delivered outside the United States or its possessions, and (c) whether the recipient is a nonresident alien individual, a nonresident alien beneficiary, or a foreign estate. Qualified distributions from a Roth IRA are nontaxable and, therefore, not subject to withholding. See special withholding rules that apply to payments outside the United Sates and payments to foreign persons.
Because your tax situation may change from year to year, you may want to refigure your withholding each year. You can change the amount to be withheld by using lines 2 and 3 of Form W-4P.
Choosing not to have income tax withheld. You (or in the event of death, your beneficiary or estate) can choose not to have federal income tax withheld from your payments by using line 1 of Form W-4P. For an estate, the election to have no income tax withheld may be made by the executor or personal representative of the decedent. Enter the estate’s EIN in the area reserved for “Your social security number” on Form W-4P. You may not make this choice for eligible rollover distributions
Caution. There are penalties for not paying enough federal income tax during the year, either through withholding or estimated tax payments. New retirees, especially, should see Pub. 505. It explains your estimated tax requirements and describes penalties in detail. You may be able to avoid quarterly estimated tax payments by having enough tax withheld from your pension or annuity using Form W-4P.
Periodic payments. Withholding from periodic payments of a pension or annuity is figured in the same manner as withholding from wages. Periodic payments are made in installments at regular intervals over a period of more than 1 year. They may be paid annually, quarterly, monthly, etc.
If you want federal income tax to be withheld, you must designate the number of withholding allowances on line 2 of Form W-4P and indicate your marital status by checking the appropriate box. Under current law, you cannot designate a specific dollar amount to be withheld. However, you can
3
designate an additional amount to be withheld on line 3. If you do not want any federal income tax withheld from your periodic payments, check the box on line 1 of Form W-4P and submit the form to your payer.
Caution. If you do not submit Form W-4P to your payer, the payer must withhold on periodic payments as if you are married claiming three withholding allowances. Generally, this means that tax will be withheld if your pension or annuity is at least $2,080 a month.
If you submit a Form W-4P that does not contain your correct
taxpayer identification number (TIN), the payer must withhold as if you are single claiming zero withholding allowances even if you choose not to have federal income tax withheld.
There are some kinds of periodic payments for which you cannot use Form W-4P because they are already defined as wages subject to federal income tax withholding. These payments include retirement pay for service in the U.S. Armed Forces and payments from certain nonqualified deferred compensation plans and deferred compensation plans of exempt organizations described in section 457. Your payer should be able to tell you whether Form W-4P applies.
For periodic payments, your Form W-4P stays in effect until you change or revoke it. Your payer must notify you each year of your right to choose not to have federal income tax withheld or to change your choice.
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.
Payments to Foreign Persons and
Payments Outside the United States
Unless you are a nonresident alien, withholding (in the manner described above) is required on any periodic or nonperiodic payments that are delivered to you outside the United States or its possessions. You cannot choose not to have federal income tax withheld on line 1 of Form W-4P. See Pub. 505 for additional details.
In the absence of a tax treaty exemption, nonresident aliens, nonresident alien beneficiaries, and foreign estates generally are 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-T, 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, to the payer before receiving any payments. The Form W-8BEN must contain the foreign person’s 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 are a foreign person who has provided your payer with Form W-8BEN, your payer instead will 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.
This is not true. While the form is primarily designed for Maryland residents, it also allows non-residents to indicate that they do not wish to have Maryland income tax withheld. Thus, both residents and non-residents can use the form to manage their tax withholding preferences.
Submitting the form does not automatically change your withholding status. You must clearly indicate your preferences on the form. If you do not complete it correctly, the Maryland State Retirement Agency will continue to withhold taxes based on your previous elections.
This is incorrect. The Maryland Tax 766 form allows you to specify a whole dollar amount to be withheld from your monthly pension payments. This flexibility can help you better manage your tax obligations based on your financial situation.
Actually, if you do not submit the form, the Maryland State Retirement Agency will withhold taxes as if you are married and claiming three exemptions. This means that taxes will likely be withheld from your payments unless you explicitly choose otherwise.
This is not the case. Your withholding choices remain in effect until you decide to revoke or change them by submitting a new Maryland Tax 766 form. You can make adjustments whenever your financial situation changes.
Filling out the Maryland Tax 766 form can be straightforward, but several common mistakes can lead to issues with tax withholding. One major error is failing to sign the form. Without a signature, the form is considered invalid, which may result in incorrect tax withholding or delays in processing.
Another frequent mistake is neglecting to check the appropriate box regarding residency status. Individuals must indicate whether they are Maryland residents or not. Misunderstanding residency can lead to incorrect tax withholding, which may result in owing taxes later.
Many people also overlook the importance of providing a correct Social Security number. If the number is incorrect or missing, the Maryland State Retirement Agency will withhold taxes as if the individual is single claiming zero allowances. This can lead to higher withholding than necessary.
Additionally, some individuals mistakenly assume they can only enter a specific dollar amount for withholding without designating the number of allowances. It is crucial to complete line 2 before entering any additional amount on line 3. Failing to do this can result in the form being processed incorrectly.
Another error involves misunderstanding the implications of selecting "no withholding." If an individual chooses not to have federal income tax withheld, they must be aware of the potential for owing taxes at the end of the year. This choice should be made carefully, considering personal financial situations.
People often forget to read the instructions on the reverse side of the form. Important information regarding tax withholding options and responsibilities is included there. Ignoring these details can lead to uninformed decisions that may affect tax liability.
Lastly, many individuals do not keep a copy of the completed form for their records. Retaining a copy can be beneficial for future reference, especially if there are questions about withholding amounts or if changes need to be made later.
Filling out the Maryland Tax 766 form, which is a combined request for federal and state tax withholding on pension allowances, is an important task for retirees. Here are some key takeaways to keep in mind:
Understanding these key points can help streamline the process and ensure that your tax withholding aligns with your financial needs during retirement.
The Maryland Tax 766 form is essential for managing tax withholding on pension allowances. Along with this form, several other documents may be required to ensure proper tax compliance. Below is a list of commonly used forms that complement the Maryland Tax 766.
These documents work together to help individuals manage their tax responsibilities effectively. It is important to review each form carefully and seek assistance if needed to ensure compliance with both federal and state tax regulations.
The Maryland Tax 766 form shares similarities with the IRS Form W-4P, which is used for federal tax withholding on pension and annuity payments. Both forms allow individuals to specify how much tax should be withheld from their retirement income. Just like the Maryland Tax 766, the W-4P requires the individual to indicate their marital status and the number of allowances they wish to claim. This ensures that the correct amount of federal tax is withheld based on their unique financial situation. Each form also provides an option for individuals to designate an additional amount to be withheld, allowing for more tailored tax management.
Another document that resembles the Maryland Tax 766 is the IRS Form 1040-ES, which is used for estimated tax payments. While the Tax 766 form is focused on withholding from pension payments, Form 1040-ES is for individuals who expect to owe tax that isn't covered by withholding. Both documents aim to help individuals manage their tax obligations effectively. They encourage taxpayers to assess their financial circumstances and make informed decisions about how much tax should be paid throughout the year, rather than waiting until tax season.
The Maryland Tax 766 form is also similar to the IRS Form 1099-R, which reports distributions from pensions, annuities, and retirement plans. While the Tax 766 is a request for withholding, the 1099-R serves as a summary of what has already been paid out and the taxes that have been withheld. Both documents are essential for retirees as they navigate their tax responsibilities. The 1099-R provides retirees with crucial information needed for filing their annual tax returns, complementing the withholding choices made on the Tax 766.
Form 4868, the application for an automatic extension of time to file a U.S. Individual Income Tax Return, also bears similarities to the Maryland Tax 766. While the Tax 766 deals with withholding, Form 4868 allows individuals to extend their filing deadline, providing them additional time to gather necessary documents and ensure accurate reporting. Both forms highlight the importance of being proactive in managing tax responsibilities, whether through withholding or extending deadlines.
The Maryland Tax 766 form is akin to the IRS Form 4506-T, which is a request for a transcript of tax return information. While the Tax 766 focuses on how much tax should be withheld from pension payments, Form 4506-T allows individuals to obtain their tax records for various purposes, including verifying income for loans or other financial transactions. Both forms serve as tools for individuals to maintain clarity and control over their financial situations, ensuring they have the necessary information at their fingertips.
Lastly, the Maryland Tax 766 form can be compared to the IRS Form 1040, the standard individual income tax return. While the Tax 766 is specifically for pension withholding, the 1040 is the final document that summarizes an individual's entire tax situation for the year. Both forms require individuals to reflect on their income and tax obligations. They play a crucial role in the overall tax process, with the Tax 766 influencing the amount withheld throughout the year and the 1040 serving as the culmination of that financial journey.