Oftentimes the cost of preparing a short form for a dependent child with anafter-school or summer job, solely for the purpose of getting a refund of thein-come tax withheld, is more than the amount of the refund.
Beforestarting a job, a student is given a Form W-4 to fill out. Line 7 of the W-4allows an employee to claim exemption from federal and state income taxwithholding, if he/she had no income tax liability for 2011 and does notanticipate earning enough to pay income tax for 2012, by writing the word“EXEMPT” in the box indicated.
Writing“EXEMPT” on the form means that the employer will withhold only FICA (SocialSecurity and Medicare) and any required state unemployment and/or disabilitytaxes from the student’s wages.
For2012, the federal standard deduction for a dependent with a W-2 is the greaterof $950 or the sum of $300 and the dependent's earned income, not to exceed $5,950(plus $1,450 if age 65 or blind). The state amount varies, and may be more ofless than $5,950.
Ifa dependent student with a summer job does not expect to earn more than $5,950during 2012, including up to $300.00 in interest, dividends and capital gains,the child should claim “EXEMPT” on his/her Form W-4. This way he/she will nothave to file a federal income tax return simply to get a refund of the incometax withheld.
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