{The post has been updated to include the 2012
standard deduction numbers – rdf}
Often
times the cost of preparing a short form for a dependent child with an
after-school or summer job, solely for the purpose of getting a refund of the
in-come tax withheld, is more than the amount of the refund.
Before
starting a job, a student is given a Form W-4 to fill out. Line 7 of the W-4
allows an employee to claim exemption from federal and state income tax
withholding, if he/she had no income tax liability for 2011 and does not
anticipate 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 (Social
Security and Medicare) and any required state unemployment and/or disability
taxes from the student’s wages.
For
2012, the federal standard deduction for a dependent with a W-2 is the greater
of $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 of
less than $5,950.
If
a dependent student with a summer job does not expect to earn more than $5,950
during 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 not
have to file a federal income tax return simply to get a refund of the income
tax withheld.
TTFN
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