IRS Publication 15A — Employer's Supplemental Tax Guide

less federal income tax withheld from eligible rollover distributions. A payee that wanted an additional amount withheld would’ve requested the additional amount on line 3 of a 2021 or earlier Form W-4P .

Withholding on eligible rollover distributions using a 2022 or later Form W-4R. The default withholding rate is 20%, but Form W -4R allows a payee to choose a rate of withholding that is greater than 20% on Form W-4R, line 2. However, the payee can’t choose a rate of less than 20%. Exceptions. Distributions that are (a) qualifying “hardship” distributions; and (b) distributions required by federal law, such as required minimum distributions, aren’t subject to the mandatory 20% federal income tax withholding. See Pub. 505 for details. Also, see Nonperiodic Payments—10% Default Withholding Rate , earlier. You shouldn’t withhold federal income tax if the entire distribution is transferred in a direct rollover to a traditional IRA or another eligible retirement plan.

Payments Outside the United States and Payments to Foreign Persons Generally, if a payee is a U.S. citizen or a resident alien, the payee can’t choose not to have federal income tax withheld on periodic payments (or choose a rate of less than 10% for nonperiodic payments) to be delivered outside the United States and its territories. Don’t use Form W -4P or Form W -4R for payments to nonresident aliens, nonresident alien beneficiaries, or foreign estates. In the absence of a treaty exemption, nonresident aliens, nonresident alien beneficiaries, and foreign estates are generally subject to a 30% 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, many 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 and Pub. 519. A foreign person should submit Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals), to you before receiving any payments. The Form W-8BEN must contain the foreign person’s taxpayer identification number (TIN) to support a withholding exemption. A TIN for this purpose means a U.S. TIN (SSN or individual taxpayer identification number (ITIN)). However, for a claim based on a tax treaty, a foreign TIN may be substituted for a U.S. TIN.

Special rules may apply to nonresident aliens who relinquished U.S. citizenship or ceased to be long -term residents of the United States after June 16, 2008. For more information, see section 5 of Notice 2009 -85, 2009 -45 I.R.B. 598, available at IRS.gov/irb/ 2009-45_IRB#NOT -2009-85. Also, see Form W -8CE, Notice of Expatriation and Waiver of Treaty Benefits. Statement of Income Tax Withheld By January 31 of the next year, you must furnish a statement on Form 1099 -R, Distributions From Pensions, Annuities, Retirement or Profit -Sharing Plans, IRAs, Insurance Contracts, etc., showing the total amount of the payee’s pension or annuity payments and the total federal income tax you withheld during the prior year. Report income tax withheld on Form 945, Annual Return of Withheld Federal Income Tax, not on Forms 941 or Form 944. If the payee is a foreign person who has provided you with Form W-8BEN, you must instead furnish a statement to the payee on Form 1042 -S, Foreign Person’s U.S. Source Income Subject to Withholding, by March 15 for the prior year. Report federal income tax withheld on Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons. Substitute Submissions of Form W-4R General requirements for any system set up to electronically receive a Form W -4R are discussed earlier under Electronic submission of Forms W -4R, W-4S, and W -4V. This section provides specific requirements for substitute submissions of Form W-4R. For payers using electronic or paper substitutes for Form W -4R, substitute forms for the 2026 Form W -4R incorporating all changes made to the 2026 Form W-4R and complying with the guidelines provided here must be in use by the later of January 1, 2026, or 30 days after the IRS releases the final version of the 2026 Form W-4R.

Electronic Substitute to Form W-4R There are several specific requirements for electronic systems set up as a substitute to paper Forms W -4R that are in addition to those described earlier under Electronic submission of Forms W -4R, W-4S, and W -4V. Electronic systems must exactly replicate the text from the face of the paper Form W-4R between lines 1 and 2, with the exception that electronic systems that are being used exclusively for nonperiodic payments may omit the second bullet, and systems that are being used exclusively for eligible rollover distributions may omit the first bullet. Electronic systems must also exactly replicate the text on line 2 and the 2026 Marginal Rate Tables (inclusive of all related text above and within the tables) as they appear after the paper Form W-4R. An electronic substitute to Form W -4R can provide a link to a web page with the 2026 Marginal Rate Tables, inclusive of all related text on the first page of the W -4R starting with the text “2026 Marginal Rate Tables,” as well as the applicable Specific Instructions, starting with “Suggestion for determining withholding,” rather than providing the tables (and related first page text) themselves, but the link must be immediately below line 2 on the electronic substitute form and be preceded by the following text: “The link below will take you to the 2026 Marginal Rate Tables. You may use these tables to help you select the appropriate withholding rate for this 24 Publication 15-A (2026)