Are College Students Exempt from Withholding?
Many college age students have a job during the summer months, and some even work during the school year. If this sounds like you, you need to make sure that you are aware of your income tax situation. In other words, is the proper amount of income tax being withheld from each paycheck that you earn? You may think that the answer to this question is always yes. But guess what? This is not the case in every situation. It is important to know if income tax is being withheld so that you know what steps to take when filing your final return.
You may be exempt from income tax withholding if you meet one of the following criteria:
1. Your total income for this year, 2008, does not exceed $5,450. You should have a good idea as to how much you have earned so far, as well as what you will make in the months to come.
2. Can your parents claim you as a dependent? If so, you may be exempt from withholding.
3. If you did not owe any income tax last year, and your unearned income, such as stock dividends and bank account interest, do not exceed $300.
By being exempt from withholding, you will be able to take home more money from each paycheck. But remember, you must still pay Medicare taxes and social security.
For those who are worried about making the wrong decision, ask a tax professional for assistance. They will be able to take all of your current and past information and give you a solid answer on whether or not you are exempt from withholding. It is always better to know for sure than to make a mistake that you will have to pay for in the end.
