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Dear Tax Talk,
As a manager, I hold orientations for new employees that include filling out the W-4 form. Most of my
employees are teenagers and never know how to fill it out. I know that I should not advise them on how
to fill it out so I have them call their parents. All I know that I can tell them is that they would
either put zero in allowances taken out or exempt on line 7. Different parents give them different
directions.
I now have a teen myself who just got her first job. I know she can claim exempt because
she is a student, but how do I do my taxes? Do I still claim her? Would she do her own taxes? I am a
part-time student myself and work full-time making $30,000 per year, so would I be able to claim exempt?
I currently claim two allowances.
-- Debbie
Dear Debbie,
Students and dependents are not exempt from income tax. If a dependent earns wages for the entire year that
do not exceed the standard deduction,
he or she does not have to pay income taxes.
It's kind of confusing because the dependent is not entitled to a personal exemption because
he or she is the dependent of another. However, the dependent is allowed to earn an amount equivalent to the
standard deduction (which is more than the personal exemption) and avoid paying income taxes.
In 2008, the standard deduction for single taxpayers is $5,450. So long as the dependent's wages for the
entire year, including other jobs, are expected to be below this threshold, they can claim exempt on their
W-4.
A parent can claim a child as a
dependent regardless of the child's income if
they meet all of the other conditions for claiming
an exemption (such as providing more than half
of their support, being a citizen or resident)
and the child meets one of the following
criteria.
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| Additional rules for dependents |
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Under age 19 at the end of the year, |
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A full-time student under age 24 at the end of the year, or |
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Permanently and totally disabled at any time during the year, regardless of age. |
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If your daughter meets these rules,
you can continue to claim her as an exemption
on your tax return. She can claim exempt on her
W-4 if she is expected to earn less than $5,450.
If all she has is a W-2 for less than this amount,
she will not have to file a tax return. She'll
need to file a tax return if her income exceeds
this threshold or she might otherwise owe tax.
You cannot claim to be exempt because your income is so high, even though you are a student.
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