Produce a Form W-4 or Form W-4P in Lacerte

How to generate/where to input information for Form W-4, Employee Withholding Allowance Certificate or Form W-4P, Withholding Certificate for Pension or Annuity Payments?

Solution:

1. On the Detail tab, go to Screen 7 Estimates/W-4, W-4P.
2. On the left panel under Estimates/W-4, click on Withholding Allowance Certificate (W-4/W-4P).

3. Enter the desired value in the appropriate MANDATORY field for either the W-4 or W-4P.
4. Select the desired print options for the forms.

• Print Form W-4 with complete return
• Print blank Form W-4
• Print Form W-4P with complete return
• Print blank Form W-4P

The majority of the information will pull from the existing input in the tax return.  Overrides [O] and Adjustments [A] are available in the input screen for the various line items.

How do I enter deductions and credits on W-4/W-4P, page 2?

Page 2 of Form W-4/W-4P contains the "Deductions and Adjustments Worksheet", where allowances are adjusted for itemized deductions or credits the taxpayer may be claiming. Lines 1 thru 3 of the worksheet increases allowances by the amount itemized deductions exceeds the standard deduction. Line 4 includes an estimate of the adjustments to income. (Such as IRA deduction, 1/2 SE tax, etc).

Line 5 is where estimated credits are included. Since credits are a direct reduction to tax, as opposed to deductions, which reduce taxable income, credits must be converted to an equivalent amount of deductions to be included in the W-4 calculation. This is done on IRS publication 919, worksheet 8. The program generates worksheet 8, and includes the results on line 5 of page 2.

The total of itemized deductions in excess of standard deduction and credits converted to deductions is then reduced by income not subject to withholding. This result is divided by the personal exemption amount to derive additional allowances, if any, to claim on form W-4.

In computing W-4 page 2, the starting point for each of the above mentioned amounts is the amount on the current year return. These amounts can be adjusted by making entries in Screen 7.1, 20YYEstimates (1040 ES). For example, assume the taxpayer did not make any charitable contributions in the current year, but plans to contribute $2,000 in cash to Goodwill next year. This can be included on the W-4 worksheets by going into Screen 7.1, and entering "2,000" in 50% Limitation [A] in the Gifts to charity subsection of Screen 7.1, 20YY Estimates (1040 ES).

Adoption credits are assumed to be a one year event, so are not automatically included in the W4 worksheet. If credits need to be adjusted on the W-4, an adjusting entry can be made in "Credits [A]" (Screen 7.2, Withholding Allowance Certificate).