W-4 help...?

Question

I'm fourteen, and this summer I'm working as a counselor at a local summer camp. This is my first time officially working. I'm a bit confused about the W-4 paper. It has to do with tax returns, I know that. But do I have to do anything differently because I am a minor? And can somebody please explain to me all of the math?

Thank you.

Answer 1

It your total earnings for the year are less than $5,350 in 2007, you will not owe any tax at all. Since you are a minor your tax-free earning limit is less since you are claimed as a dependent by your parents and lose your personal exemption of $3,400.

You generally should claim 1 on your W-4 if you know for a fact that you'll earn less than $5,350 for the entire year. Technically you could claim EXEMPT but that can get risky if you wind up earning more than $5,350 since you'd have a tax bill that you'd have to pay when you filed your return.

If you suspect that you might earn more than $5,350 you probably should claim zero so you don't owe anything at tax time. Any excess withholding will be returned to you when you file your tax return in 2008.

Answer 2

The W-4 tells your employer how much of your pay to withhold for federal and state taxes. The more exemptions you claim, the less they withhold. As a minor, you typically have only one exemption (yourself). If you prefer to have the maximum withheld, you can put zero (0) exemptions on the W-4.

The effect of the W-4 is only on the withholding from your pay. When you file your tax return next spring, any money withheld in excess of the tax you owe for the year is refunded to you. So if too much is withheld each month, you get it refunded when you file.

If too little is withheld, then when you file, you include payment of the owed tax.

At the income level you're likely to have, it's doubtful you would owe taxes more than withheld if you put 1 exemption on your W-4.