Show Exempt Taxes Exempt From Exemption INTERNAL REVENUE SERVICE Many students with summer or part- part time jobs can no longer claim exemption from federal income tax withholding according to the Internal Revenue Service Because of tax law changes made by the Tax Reform Act of 1986 students who can be claimed as dependents on their parents' parents or another persons person's tax return cannot claim exemption from withholding for 1987 if they have any unearned income such as interest on savings and their wages plus this unearned income will be more than for the year However students whose wages for the year are 2540 or less and who have no unearned income generally will be exempt from withholding Students can claim exemption from tax withholding on their Form W 4 or W- W Employees Withholding Allowance Certificate only if last year they had to pay no federal income tax and this year they expect to have to pay no federal income tax the IRS said If exempt status is claimed it remains remain in effect until February 15 of the next year Generally students not exempt from withholding should claim one withholding withhold withhold- ing allowance if they have only one job at a time Or if they need or want more tax withheld they should claim zero allowances The Form W 4 or W instructions have more details And IRS has prepared Publication Is My Withholding Correct to help taxpayers determine whether they are having the right amount withheld Many students who had to pay no tax in the past will have to pay tax for 1987 and so cannot be exempt from withholding because of the Tax Reform Act of of 1986 according to IRS Beginning in 1987 any child who may be claimed as a dependent on a parents parent's return is not entitled to a personal exemption on his or her own return Also the standard deduction for an individual who can be claimed as a dependent on another is limited to the greater of or the individuals individual's earned income but not more than the allowable standard deduction 2540 for a child who is not blind For example a dependent child who is not blind has unearned income and does not work gets a standard deduction of If this dependent child works and earns over the standard deduction equals earned income but may not exceed 2540 Generally if the childs child's total income is greater than his or her standard deduction the child will have to file a 1987 tax return and will have a tax liability ty Forms W 4 and W are available from employers Or they are available from IRS by calling 1 In Hawaii and Alaska call the IRS Forms Only number in your local telephone directory |