My 16 year old claims exempt. How do I file for her as my dependant?

[Hal_Al]

A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:

1. He is under age 19, or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled

2. He did not provide more than 1/2 his own support. Scholarships are considered third party support and not as support provided by the student.

3. He lived with the parent (including temporary absences such as away at school) for more than half the year

 So, it doesn't matter how much he earned. What matters is how much he spent on support. Money he put into savings does not count as support he spent on him self.

The support value of the home you provided is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants.

Furthermore, there is a rule that says IF somebody else CAN claim him as a dependent, he is not allowed to claim his own exemption. If he has sufficient income (usually more than $6300), he can & should still file taxes; he just doesn’t get his own $4000 exemption (deduction). In TurboTax, he indicates that somebody else can claim him as a dependent, at the personal information section.  

Even if he had less, he is allowed to file if he needs to get back income tax withholding. He cannot get back social security or Medicare tax withholding.

[DoninGA]

She claims exempt on the W-4 she gave to her employer?  That has no effect on whether or not you can claim her as a dependent on your tax return.  You claim her as a dependent on your tax return using the Qualifying Child rules.

To be a Qualifying Child -

1. The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.

2. The child must be (a) under age 19 at the end of the year, (b) under age 24 at the end of the year and a full-time student or (c) any age and permanently and totally disabled.

3. The child must have lived with you for more than half of the year. Temporary absences while away at college are considered living with you.

4. The child must not have provided more than half of his or her own support for the year.

5. If the child meets the rules to be a qualifying child of more than one person, you must be the person entitled to claim the child as a qualifying child. 

6. The child must be a U.S. citizen or U.S., Canada or Mexico resident for some portion of the year.

7. The child must be younger than you unless disabled.

[Opus 17]

No one who earns income is exempt from taxes.  A person who earns money working always reports that income on a tax return in their own name.  This does not stop you from claiming the person as a dependent if they meet the qualifications.

Your child may be exempt from withholding if this is the first year they work or if their income is expected to be less than $6200.  If their income is more than $6200 they will owe federal income tax and must file a return in their own name.  They may also owe state tax with different filing limits.

At that income level they can use the Turbotax Freedom edition.  Or do it by hand on a form 1040-EZ downloaded from the IRS web site.  Good learning experience.