Do I still have to deduct taxes each month during the year from a pension or annuity if...?

Depending on the circumstances, you may be able to fill out a W-4V and claim EXEMPT from withholding. Ask your financial institution if this is an option for you. In particular, if you are receiving periodic payments you usually can opt to have no tax taken out.

In other cases, withholding is required.

No as long as you do NOT end up receiving some other worldwide taxable income form other sources that could cause you to end up with a FIT liability during the next tax filing season for the 2013 tax year in during the 2014 tax filing season.

Form W-4P, Withholding Certificate for Pension or Annuity Payments

Form W-4P is for U.S. citizens, resident aliens, or their estates who are recipients of pensions, annuities (including commercial annuities), and certain other deferred compensation. Use Form W-4P to tell payers the correct amount of federal income tax to withhold from your payment(s).

W-4 Line 1 Check here if you do not want any federal income tax withheld from your pension or annuity. (Do not complete line 2 or 3.) ▶ __

Fill the name and address section out completely and then go to the line 1 and check the box and go to the bottom of the W-4 sign it and date and then send then make a copy for your records and send the signed copy on to the TRUSTEE payer of your pension amounts for this purpose and time in your life.

www.irs.gov/pub/irs-pdf/fw4p.pdf

Hope that you find the above enclosed information useful.04/24/2013

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if you do not anticipate owing as much as you did the previous year(or $1000) you can report, file and claim your income tax when you file