im 16 and i just claimed exemt on my tax form for my first job what does this mean??
2007-08-07 21:06:02 · 5 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
It means that you won't have federal or state withholding taken out of your paycheck, as you are not expecting to have a federal or state liability when you file your 2007 federal and state tax returns. You will still have social security tax, 6.2% of paychecks, and medicare tax, 1.45% of paychecks taken out of your paycheck. That you can't be exempted from.
2007-08-08 04:59:33 · answer #1 · answered by Anonymous · 0⤊ 0⤋
It means that income tax will not be withheld from your pay. FICA taxes will still be withheld.
You can only claim exempt if both of the following tests are met:
1. You had $0 tax liability last year.
2. You reasonably expect to have $0 tax liability this year.
At age 16, you are almost certainly still claimed as a dependent by your parents. As such, the most you can earn at a job subject to withholding for 2007 is $5,350. If your earn any more than that, you will have a tax liability and would not be able to claim EXEMPT from withholding.
If you know for a fact that you'll earn less than $5,350 you'll be OK. If you know or suspect that you might earn more, you should file a new Form W-4 with your employer and withdraw your EXEMPT claim as you are not eligible.
2007-08-08 07:14:34 · answer #2 · answered by Bostonian In MO 7 · 1⤊ 0⤋
It means you have told your employer that you do not expect to make enough money to owe any income tax this year, so they shouldn't withhold any. They will still withhold social security and medicare taxes though - everybody has to pay those.
If you are 16, you are almost surely still a dependent of your parents. If so, you can make up to $5350 this year and not owe any federal income taxes. If you are not a dependent, the limit is even higher.
So as long as you don't expect to make more than that, you are OK to file "exempt" on your W-4. If you think you will make more than that, get a new one and fill it out as single, zero allowances.
Depending on where you live, you might owe some state or local income tax even though you don't owe federal income tax.
And filing exempt or owing tax has nothing to do with your age, as at least one responder said. Age doesn't matter, it's income.
2007-08-08 10:05:32 · answer #3 · answered by Judy 7 · 1⤊ 0⤋
Well claiming exempt isn't legal anymore...well, at least the way I read the new law (as applied to your case). But, what it basically means is that you are claiming that you won't owe any taxes at the end of the year. Therefore, your employer will not withhold any income tax, they will still take out the Social Security and Medi-Care taxes though.
2007-08-08 05:33:42 · answer #4 · answered by Russ B 6 · 0⤊ 4⤋
It means you're 'exempt' (don't have to pay) tax due to your age.
2007-08-08 04:10:26 · answer #5 · answered by Fyre 1 · 0⤊ 5⤋