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Can You Claim To Be Exempt from Federal Income Tax Withholding?

by rlcoch01 last modified Oct 31, 2007 05:33 PM

Is it possible for you to have no federal income tax withholding at all?  It's possible that you qualify, but not very likely.  You can claim to be exempt from federal withholding only if both of the following conditions apply:

  • you ended up owing no federal taxes last year, and all the federal tax withheld from you during the year was given back after you filed your return, and
  • you don't expect to owe any federal taxes for the current year.

However, even if the two conditions above are true, you still may not be exempt from withholding.  If your income for the year is more than $850, and includes over $300 of unearned income (like interest and dividends), and someone else is claiming you as a dependent, you are not exempt from federal income tax withholding.

Students are not automatically exempt.  High school and college students have to meet the conditions above to claim an exemptions.

You have to renew your claim to an exemption each year by February 15.  If you don't your employer will start withholding federal tax from your paychecks as if you were single and had zero withholding allowances.  Submit a new W-4 form to your employer to renew your claim.

Almost no one is exempt from social security or Medicare tax.  A claim of exempt status won't affect your social security or Medicare tax withholding.

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