D just called me and said, “Mom, how do you fill out a W4” and turns out that she just landed a job being a hostess at a high end restaurant here in the city. She starts monday, she’ll be making $12 an hour plus shared tips from the waiters…and working a 40-hour week until she leaves for school in late August. So how does this work? We still claim her as a dependent, yes? And then does she file taxes separately. This is new territory for us. Until now, it’s been off-the-books babysitting and dog-walking.
If this is the only money she’ll make, and you think it will be under $6300 total (the tips will appear on her paystub, just like wages), she won’t owe any federal taxes and can fill out the W4 as ‘exempt’ and the employer will not withhold taxes. If she has other income, scholarships in excess of QEE and she will have more than $6300 in income, then she should claim 1 or 2 exemptions, and they will withhold taxes and she files a 1040A or EZ next Jan.
State taxes are different. She may owe on those. It really depends on where she is.
Maybe you meant $6200.
For 2015, it’s $6300 standard personal exemption.
We always had the kids claim zero exemptions. When they work multiple part time jobs, even sequentially,the small amounts add up quickly and no job seems to withhold enough.
But yes, you still claim her as a dependent, and yes she will file her own return.
Be aware that states with state income tax may have their own state version of the W-4 that has a different calculation from the federal income tax W-4 form. At least once when I was starting a new job, the payroll person was somewhat surprised when I gave both forms, with different exemption numbers, since the state calculation for exemptions was different from the federal calculation.
W-4 forms and their state equivalents can come with instructions, or the instructions can be found on the web. So can the withholding tables and calculations if one wants to go into that level of detail to adjust the withholding. However, estimating what the correct amount to withhold (or pay estimated tax) is made complicated by the complexity of the tax system, including the various deductions, credits, special tax rates, etc. and the several different tax rates as income increases.
Be aware of the FICA and the lack of WH on the tips.
My daughter’s tips had the regular withholding upon them. They were noted separately on her paystubs from the hourly earnings, but included in the total, so taxed.
I think the requirement for claiming her as a dependent is when you are providing over 50% of her support over the year, so for this summer job, she won’t reach that criteria. When she files on her own, if she does, then she can not claim herself if you claim her, but she would still file separately.