picture of tax withholdings form

How Should a Teenager Fill Out a W-4?

by Jun 16, 2022Accounting for Business, Accounting for Small Business, Tax Accounting

When anyone starts a new job, one of the first tasks as a new employee is to fill out their employee paperwork, including their W-4

What is a W-4?

Everyone must pay taxes on their income.  The W-4 form tells your employer how much money to withhold from your paycheck and submit to the IRS for your income taxes.

(You must complete your own W-4 form; your employer does not advise or fill it out for you.)

Is My Teenager Exempt from Paying Taxes?

In general, a teenager who is claimed as a dependent on a parent or guardian’s taxes can earn up to the standard deduction amount in a tax year without having to pay income taxes:

2021 Standard Deduction for Unmarried Dependents

The greater of $1100 or the dependent’s earned income+$350, not to exceed $12,550

2022 Standard Deduction for Unmarried Dependents

The greater of $1150 of the dependent’s earned income+$400, not to exceed $12,950

If your teenager’s income doesn’t exceed $12,950 in 2022, their taxable income would be zero, and they can claim exempt from having taxes withheld on their paychecks.

How to Claim “Exempt” 

On the W-4 form, simply write “Exempt” as shown below.  “Exempt” indicates that the teenager Is not obligated to pay taxes; therefore, they do not need to have taxes withheld from their paycheck.

This is not an exemption from paying Social Security and Medicare.  Those will still be deducted from the teenager’s paycheck. 

Claiming Exempt vs Single 0

The amount of taxes withheld from your paycheck depends on the number of withholding allowances you claim. 

For example, this is an estimation of how the allowances you claim on your W-4 result in the amount of taxes withheld from a $150 paycheck:

ALLOWANCES TAX DOLLARS ESTIMATED TAXES WITHHELD FROM $150 PAYCHECK WHEN YOU FILE YOUR INCOME TAXES …

0: As a single person with zero dependents (Single 0)

 

This would result in the most taxes taken out of their paycheck. $18.30 If you claim single 0 and earn up to $12,950 in 2022, filed taxes would likely result in a refund.
1: They could claim themselves as a dependent (1 allowance) This would result in taxes withheld, but less withheld than claiming 0 allowances. $14.70 If you claim 1 allowance and earn up to $12,950 in 2022, filed taxes would likely result in a refund.
Or claim Exempt if they don’t believe they will earn more than the standard deductions in the calendar year ($12,950 for 2022) This would result in no federal taxes taken out. $0 If you claim exempt and earn up to $12,950 in 2022, you would not have to file taxes.

Again, Social Security and Medicare is still deducted no matter the allowances claimed.

CPA for Help with Your Tax Planning

For help with your tax planning, give us a call.

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