W-4: What Does It Mean to Claim Exempt?

by William Adkins ; Updated December 09, 2017

When you are hired, your new employer hands you a W-4 form to fill out, on which you calculate how many withholding allowances to claim so your employer deducts the correct amount of taxes from your paycheck. If you know you won't owe any taxes for the year – if you are a student who only works the summer months, for example – and you meet Internal Revenue Service criteria, you can request exemption from income tax withholding using line 7 on the W-4 form.

How W-4 Exemption Works

When you elect to claim “Exempt” on a W-4, no income taxes are withheld from your paycheck. However, your employer must continue to deduct Social Security and Medicare taxes. To be eligible to claim Exempt status, you must have had no tax liability the previous year. That is, when you filed your taxes, you were due a refund of all income tax withheld from your pay. In addition, you must reasonably expect that you will not have a tax liability for the current year. In general, your tax liability is zero if your total income is less than the sum of the standard deduction plus the personal exemption most taxpayers can claim on their tax returns. For the 2017 tax year, the standard deduction is $6,350 for single tax payers, or $12,700 if you are married and filing jointly. and the personal exemption is $4,050.

Exemption Limitations for Dependents

There is an additional limitation for claiming Exempt on a W-4 if you can be claimed as a dependent. Income limitations vary depending on whether or not you are under 65, if you are blind, or can claim adjustments or tax credits on an itemized tax return. All dependents must meet the requirement of no tax liability the previous year and no anticipated tax liability in the current year.

References

About the Author

Based in Atlanta, Georgia, W D Adkins has been writing professionally since 2008. He writes about business, personal finance and careers. Adkins holds master's degrees in history and sociology from Georgia State University. He became a member of the Society of Professional Journalists in 2009.

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visa vanilla gift card balance onlinehow to calculate wage garnishmentcorporate debt to equity ratiorenting houses with bad creditwhat does swift mean in bankingmvq privacy matterswhen do w2's need to be mailedwhat is the longest mortgage termcapitalism private propertysending cash through uspstransfer ira to spousefederal withholding calculator texasbankruptcy letter of explanation for mortgagereloadable visa cards for kidstuition reimbursement taxableespp capital gainsus bank flexperks rewards centerwhere to buy a prepaid mastercardsynonyms for division in mathuniversity of florida cheerleading scholarshipstricare standard cardwestern union prepaid card numbermedi-cal bic cardcreditsecureharris county liensdifference between filing single or marriedirs e-file pinlease repossessionrental checklist for walk throughcredit limit worksheet form 8863additions to retained earningsmy compass account.ga.govswimming pool liability insurancedentist that accept united healthcarebuy nestle stockwhat is a cuspiddisadvantages of a certificate of depositnevada lease lawstwisting insurancecalculating price weighted indexhow to cancel purchase on ebayuniversity of maryland instate tuitionrequest and order to seize property michiganinsuring a salvage cartax write offs for insurance agentscalculate share price from epsfedex w2 onlinebid ask sizega statute of limitations on debtwhat is fitw on paycheckwages garnished without noticedeclaration of homestead californiarepossession letter templaterequirements for medicaid in nccitibank wire transfer limitcan you buy pet food with food stampswhole life insurance northwestern mutualsolicitation letter sample for financial supportwhat is exempt on w4divorce credit card debtadd money to prepaid card with checking accountcalculate capextac foreclosurebank money order vs cashiers checkmortgage compliance checklistusaa rentaldisadvantages of deficit spendingfederal oasdi withholdingcan i redo my tax returnpre ipo stockhow to calculate inflation rate using price levelcitgo online paymentpost closing trial balance containscan a noncustodial parent claim child on taxescraigslist scamswhat does avm stand for
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