Show Working Students May Have Hav To At I. I Pay Taxes J t v y v Many students with summer or j jobs bs can no long longer r claim I im exemption from federal income tax withholding according to the Internal Internal Internal Inter Inter- nal R. R Revenue v mue Service Because of tax law changes made by th the the T fax Tax x Reform 1986 1986 stud students ts who ho can be claimed as dependents on their par parents ts or another persons person's tax return cannot claim exemption from withholding for 1987 if they have any investment investment investment invest invest- ment income such as interest on savings and their wages plus this investment income will be more than for the year However students whose wages wages wages' for the year are 2540 or less and who have no investment income generally will be exempt from withholding Students can claim exemption from tax withholding on their Form orm W 4 Employees Employee's Withholding Allowance Certificate only if last year they had to pay no federal income tax and t this is year they expect to have to pay no federal income tax the IRS said If exempt status is claimed it remains in effect until February 15 of the next year Generally students not exempt from withholding should claim one withholding allowance if they have only one job at a time Or if they need or want more tax withheld they should claim zero allowances See the Form W 4 instructions for S more details Many students who had to pay no tax in the past may have to pay tax for 1987 and so cannot be exempt from withholding because of the Tax Reform Act 1986 according to IRS Beginning in 1987 any child who may be claimed as a dependent on a parents parent's return isn is n not t entitled to a personal exemption on his or her own return Also the standard deduction for foran foran foran an individual who can be claimed as asa asa asa a dependent on another taxpayers taxpayer's return is limited to the greater of or orthe orthe orthe the individuals individual's earned income but not more than the allowable standard d deduction 2540 for a single child who is not blind For example a dependent child chil who is not blind has investment income and does not work gets a standard de deduction luction 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 herstand herstand herstand stand deduction the child will have hav to file a 1987 tax return and will have a tax liability Form W 4 is available from employers or from IRS by calling 1 |