2023 income under $10,000 and dependent. Tax exempt?

[blaknyt]

Last year, I made under $5000, but i didn't know about being tax exempt until now, so I filed for my taxes and received a $35 tax return. This year, I will make under $10,000, but can I file as Tax Exempt? I am a dependent.

[xmasbaby0]

You do not "file as tax exempt."   There is no place on a tax return form to say you are exempt.   If you are someone else's dependent then your federal standard deduction may be less than the usual amount for a person filing single.  And...your state's tax laws may require you to pay tax even if you do not owe the IRS.  Saying that you are "exempt" could put you at risk of owing the state at tax time, even if you will not owe the IRS.   If you have more withheld than your tax liability, you will get it back by filing a tax return and receiving a refund.

A tax return is the Form 1040 that you file/send in to the IRS.   The money you get back is a refund--not a return.   You get a refund if the amount withheld was more than your tax liability.

You are asking if you should say on your W-4 for the employer that you are exempt.  No.  Do not say you are exempt, even if you are unlikely to owe tax or expect a refund.   If your income is low, then the employer will not withhold federal tax, or will not withhold very much anyway.   

You will still have to pay in to Social Security and Medicare, which will not be refunded to you.   If you work as an independent contractor, instead of as a W-2 employee,  you will pay self-employment tax for Social Security and Medicare.

[xmasbaby0]

Just one other thing---your tax return should be a simple one---you can use TurboTax's Free Edition or use one of the free software versions available from the IRS site so that filing a tax return does not cost you anything.

-Use this IRS site for other ways to file for free.  There are 8  free software versions available from the IRS Free File site

https://apps.irs.gov/app/freeFile/

[blaknyt]

Thank you so much for the help. I'm so happy there are amazing forums like these for people who don't understand taxes very well. I have one more question to be sure, but you gave a great answer already. 

I filled out a survey through the IRS to see if I needed to pay income tax. They asked me this: "Did you have a right to a refund of all federal income tax withheld because you had no tax liability in 2022?"

Could this apply to me?

[xmasbaby0]

Yes that could apply to you if you expect to make less than the amount of the federal standard deduction.

I cautioned you about saying you are exempt because the threshold for state tax in your state may be lower than the federal amount.   If you say you are exempt and have no tax withheld, you could end up owing your state.   If you make less than about $260 per week, your employer will not withhold federal tax from your paychecks---they will only withhold Social Security and Medicare.   You must pay in to SS and Medicare no matter what.  You are not exempt from having money withheld for those.

[blaknyt]

So I live in Ohio, which has a threshold of $26,050. I know I will not make more than $10,000. Should I then file exempt, or should I say I have the right to refund? 

Should I do anything particular now, or for my tax return that has to do with what we have been talking about?

[blaknyt]

I have already filed my W4 for my summer job. I did not say anything about being exempt. Should I keep it that way, or request to update my form?

[Critter-3]

Just leave it be.