When Can I Claim Exempt on My W-4?

Posted by on December 3, 2015
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When Can I Claim Exempt on My W-4?

Tread carefully before claiming exempt on your W-4 form.

Your W-4 is filed with your employer. Based on a number of allowances and exemptions you claim, your employer will withhold a certain amount of your income from each paycheck to cover taxes owed to the IRS. If you claim EXEMPT on your W-4, it means that no taxes will be taken out of your paycheck throughout the year to cover what you may owe to the IRS. Claiming exempt does not apply to everyone. Let’s find out why.

Am I eligible to claim exempt on my W-4?

If you want to claim exempt on your W-4, both of the following need to be true:

  1. For the prior year, you had a right to a refund of all federal income tax withheld because you had no tax liability.
  2. For the current year, you expect a refund of all federal income tax withheld because you expect to have no tax liability.

If one or both of these are false, then you will not be eligible to claim exempt on your W-4.

Are there any exceptions?

In some cases, claiming exempt is just not an option. Below are some reasons why it may not be for you:

  • If your income is $950 or more and at least $300 of that is from un-work-related income (ie: interest or dividend income), then you cannot claim exempt from taxes.
  • If you plan to claim dependents on your tax return, then you cannot claim exempt from taxes.
  • If you will be itemizing your deductions on your tax return for the year, then you cannot claim exempt from taxes.
  • If you are Age 65+ or blind, you must use IRS Worksheet 1-3 or 1-4 to determine if you can claim exempt.

I’m EXEMPT for tax purposes. How do I report that?

After doing some research and realizing that you are, in fact, eligible to claim EXEMPT on your W-4, you’ll need to report that. On your W-4, leave box 5 blank. If you have an amount in Box 5, that takes precedence over Box 7.

Box 7 is where you will simply write the word “EXEMPT”. This will ensure that no withholdings are taken from your paychecks.

What if I claim exempt on my W-4 without being eligible?

You can say hello to a pretty hefty tax bill after filing your tax return along with possible penalties. You are essentially the one responsible for what you report on your W-4. If it is incorrect, the IRS won’t let that slide come time to file your taxes. You’ll be issued a tax due amount with further instructions on how much you owe and payment options.

You could be facing a $500 penalty fee if both of the following are apply to you:

  1. You make statements or claim withholding allowances on your W-4 that reduce the amount of tax withheld from your paychecks.
  2. You have no reasonable basis for those statements or allowances at the time that you complete your W-4.

Although penalties from the IRS seem intimidating and sometimes just down-right unfair, they shouldn’t scare you out of claiming something you are eligible for. If you make an honest mistake, you won’t be penalized. It happens. These penalties and strict guidelines are instated in order to keep some sort of order in an organization which is literally trying to cater to the entire nation.

Is there automatic exemption for students?

Although students are loved in the retail and food industries with free fountain sodas at Chipotle and a 15% discount at Kate Spade, the IRS (unfortunately) doesn’t offer the same. Students are advised by the IRS to follow the same guidelines as other taxpayers.

Not to worry, though, students! There is a bright side after all. You may not be automatically exempt from income taxes but you are exempt from FICA (aka social security and Medicare) as long as you are enrolled as at least a half-time student.

When in doubt, ask for help!

It’s easy to fall into the IRS trap filled with tax jargon and W-4 confusion. For many of us, taxes are a thought in our minds only once a year. That’s why we’re here to help you. If you have a tax question and need help preparing your tax return for the year, reach out to our tax experts here at Rapidtax via livechat, email or phone.

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78 Responses to “When Can I Claim Exempt on My W-4?”

  1. Sabrina McNeill says:

    I have an employee who is over 65 years old and wanted to know if he could “legally” be exempt from having “federal” income tax withheld from his pay. Thanks so much – Sabrina

  2. Ray says:

    Hello, I will be receiving a very large overtime check in December. I do not claim any dependents or exemptions thru the year. Can I claim an exemption for the month of December only, or will it affect my entire year? I do itemize and claim my children at filing time.

    • Hi Ray,

      You should not claim Exempt if you are not eligible to do so. That being said, you may want to consider updating your W-4 to claim more allowances. The more allowances you claim, the less is withheld from your paycheck. The less allowances you claim, the more is withheld from your paycheck. Overall, you’re still paying the IRS the same amount of tax. The W-4 just determines when you pay them; throughout the year, little by little out of your paychecks or in a lump sum after filing your tax return for the year. If too much is withheld from your paychecks, you will receive a refund. If too little is withheld (ie: you claim Exempt when you shouldn’t), you will have a tax bill with the IRS.

  3. Sarah says:

    Hello,

    I am currently a full-time student, listed as a dependent*, and will be working part time. I was wondering if I qualify as exempt on the W-4?

    *I do not file taxes as I am dependent, my parents, however, do.

    • Hi Sarah,

      You might be able to claim exempt on your W-4. However, it does also depend on the amount of income you are earning. I suggest taking a look at the IRS Exemption Tool HERE. This will ask you several questions about your tax situation to provide you with a specific answer to whether or not you can claim exempt.

  4. Jenny Castro says:

    I am single with no dependents. I got a tax refund last year. Am I exempt?

    • Hi Jenny,

      The information you have provided cannot determine whether or not you are exempt from withholding. It will depend on your income for the year among other factors. You can see if you correspond to the qualifications listed in the above article or contact your tax preparer for more information.

  5. Diamond says:

    I think I’ve been filing my w4 wrong each year. The exemptions confuse me I do not completely understand. I always file exempt how do I know if I’m wrong?

    • Hi Diamond,

      You most likely only qualify as exempt if the two requirements listed above under “Am I eligible to claim exempt on my W-4?” are true. If you claim exempt on your W-4, and were NOT qualified to do so, then you would end up owing the IRS a fairly large bill after filing your return for the year. However, if you’re still unsure as to how to complete your W-4, then check out our other articles, “Do I Claim Zero, One, Two W-4 Allowances?” and “How to Fill Out a W-4 Correctly“. This has specific examples for you to relate your own situation to.

  6. Rhea says:

    I am married with 1 child and had a part time job last year until now. My husband claim me and our son as dependents. Every year we file jointly and get refund. This year my employer wants me to update my W4, last year I claim zero allowances but I usually check the exempt box. Am I doing it right? Need help.

    • For help with your withholding, you may use the IRS Withholding Calculator. This easy-to-use calculator can help you figure your federal income tax withholding so your employer can withhold the correct amount from your pay. This is particularly helpful if you’ve had too much or too little withheld in the past, your situation has changed, or you are starting a new job.

  7. Miracle Jackson says:

    I make more than $950 every 2 weeks. All of that is from regular full time work. Can I file exempt so as long as I do not file for a tax return at all? if so is that acceptable to do so immediately or wait till the beginning of a new year or job? I’m 29 btw with no kids. unmarried.

    • From the situation that you outlined it through your message, it is advised that you do not claim as exempt for your W-4. Even though you are single with no kids, you may still be tax liable for an amount. Claiming as exempt on your W-4 pertains to how much income you earn and your personal situation, whether or not you file a tax return should not be used as a factor for claiming as exempt on your W-4

  8. Jose says:

    I filed exempt because I can’t afford my bills what are my options?

  9. Brianna says:

    I claimed exempt because I never had a job before and the place I was working only paid $9.75 an hour for only 12 hours every week (I’m paid bi-weekly and I started my job this November?) But I want to get a seasonal job at another place during the summer but I’m not sure what I would put.

  10. Tina DeRider says:

    I am 45 and disabled. I have a part time job, but am only allowed to ear a certain amount per month before they take my disability. Would it be to my advantage to claim EXEMPT since I will always fall below the poverty average, or close to it?
    Thanks!

  11. Kathleen says:

    I was on long term disability all last year and earned very little.( Below $5000)I know it’s not considered earned income & it’s not taxed so I won’t be filing for 2016. I did receive my refund from the previous yr 2015. This year I’m starting a part time job. Not married/no kids. Can I file as Exempt?

    • It’s best to only claim an exemption when you are certain that you will be owing no taxes whatsoever. If for this year you have determined that your return will end up looking about the same as your last year return, you can use that to determine how to file your W-4 this year.

    • It’s best to only claim an exemption when you are certain that you will be owing no taxes whatsoever. If for this year you have determined that your return will end up looking about the same as your last year return, you can use that to determine how to file your W-4 this year.

  12. Donnie says:

    Hello I filed exempt through my employeI.I told my human resources rep exactly what weeks I was planning on exempting,and he told me the dates I should fill out the paperwork (my w4)and have it turned in by. I did so, and when I got my paycheck it had not been exempted, even though I filled out the forms and had been told that on the day of turning it in that it had cleared and been processed correctly. My question is,is illegal for them to have made an error on my w4 and not have told me about itand if so should I be contacting my local area labor law firm

    • You can follow up on the discrepancy made on your W-4 form with your employer. If you are looking to take legal action against them then you can consult with a tax attorney to determine if this is your best resolution.

  13. Andre Rivera says:

    I’m married my spouse doesn’t work I have 3 children and my mother in law living with me would I qualify for exempt and if so how long all year or should I only claim partial exempt for the year.

    • Firstly, if you plan to claim dependents on your tax return, then you cannot claim exempt from taxes. Additionally, to determine if you meet all of the requirements for filing exempt you can refer to the following IRS test.

      • Michael says:

        I am confused as to why if I claim a dependent that I cannot claim exempt. I have no tax liability at the end of the year and everything I paid out I get back. I meet both requirements to file exempt. I have been filing this way for almost 7 years and have had no problems.

        • If you are following the guidelines for line 7 on your W-4, then you are eligible to claim that you are exempt.

          • Michael says:

            That is my understanding but after reading what Michelle wrote about claiming dependents it would make someone think that if they claim a dependent then they cannot file as exempt. I understand you cannot claim any dependents on your w4 if you are wanting exemption from federal but on your tax return you should be able to claim as many dependents as you are entitled to claim.

  14. Keyonna says:

    Good Morning,
    I am a full time student starting in August of this year(2017) and claim myself on my taxes. I am only 23yrs of age and will be 24 in December who is a part time worker who works less than 40hrs a week. Can I claim exempt on my taxes?

    • It is best if you consult with your payroll department as they will be able to better assess and advise you on whether you should claim exempt. This is dependent on how much you earn and whether or not your parents will be claiming you on their return. Typically the more allowances you claim the less taxes are withheld but you may run the risk of having a tax liability at the end of the year. The general rule is to be as close to zero when filing your tax return, so that you can get the most out of your income earned through the year without having to wait for it in the upcoming year.

  15. Dan says:

    Hello,

    I have an intern who is about to start his internship with the company on June and will conclude in September. He works full-time and he wants to claim exempt on his taxes so is this possible and is this possible for New York taxes as well ???

    • Everyone has the right to claim exempt on their W-4s, however whether or not you are fine with having a tax liability at the beginning of next year for taxes owed because you claimed exempt is another problem on it’s own. If they have determined that they will not be owing any taxes when they file their return next year, then there should be no concern with claiming exempt. However it is advised to have taxes withheld and that is dependent on individual situation and income earned.

  16. David says:

    I receive a tax refund ever year. I will be receiving a large bonus from my employer. I would like to file exempt on my W-4 form for the bonus and a couple of pay checks. Then switch back to my original W-4 form is this possible. Thanks

  17. Shakerra L Brown says:

    I want to have less taken from my check I’m single with one child I dont care if I won’t get a refund this year if I file exempt will it stop taking out all taxes? Or just federal?

    • When filing your W-4, if you are filing exempt, it will stop taking out taxes for the federal government. State taxes may still be withheld, however, if you are filing exempt, be wary that you may incur a tax liability when you file your return the year after. Typically you should only file exempt when you now that you will not be owing any taxes to the IRS.

  18. Beerly Stewart says:

    Can I file Exempt on W-4 if I owe the IRS and have not filed taxes for 2 years.

    • If you have a liability for prior years and have not filed your taxes for 2 years, I would advise against filing exempt. It is only best to file exempt when you know that you are due a refund or have no tax liability.

  19. Cecilia says:

    Hi! I recently started working at a company, and when it came time to file my w4 form, I was unsure of what exactly to fill out, so I went ahead and wrote down exempt. The prior year I filled for tax refund with 1 dependant. What should I do?

    • You may need to update your W-4, however, this is not necessary if you plan on paying back any liability that you may owe at the end of the year. Typically, one should only file exempt if they know that they have a refund or are not liable for any taxes for the year.

  20. Michael says:

    I’m single father of 2, just started new job. I think I messed up by claiming exempt. There was a confusion on my part. If knowing that I have to owe taxes for this coming year can I still claim 3?

    • When it comes to the number of allowances you should claim, it’s best for you to claim the amount according to the guidelines outlined on the W-4. You can also use the IRS Withholding Calculator to assist you as well. But it would be best for you to speak with your payroll department, as they can better assess your situation for advisement.

  21. dee says:

    hey
    i am 18 and a citizen of US but i leave in Nigeria and i am presenlty in the US to do a summer job for just 2 months and I go back to Nigeria August. i am earning minimum wage do i write exempt on the w4 form?

    • Hello Dee,

      Since you are a US citizen and you are earning income in the US, they have the ability to tax you on the income you earn. We recommend that you consult with your employer if there are any technicalities that apply to you.

      In order to claim exempt, you will need to expect a refund of all federal tax withholding because you did not have tax due.

  22. Corey Gyger says:

    I messed up. I received information from an unreliable source and went exempt for the WHOLE year. From what I Ib read I was not eligible. To top it all off I only filed ONE W2 because I couldn’t find the one where I was exempt the WHOLE year. CAN I FILE that one next year? Or am I screwed? I’m sure I’m gonna have to pay thousands of dollars. God I HOPE there’s payment plans…I’m such a gullible f!$k! Any help would be appreciated.

    • Any income statements that you receive for the specific year must be filed within that tax year return. You must retrieve all of your income statements either through your previous employer or request an income transcript from the IRS and the State offices. The IRS does provide payment plans, however, it would still be best for you to speak with the IRS about your options and further assistance on this matter.

  23. Eduarda Xavier says:

    I’m a full time student who will be making 11$/hr working a part-time job. I am going to get paid bi-weekly. I file my taxes and my parents do not. I do not claim anyone. I was wondering if I qualify as exempt on the W-4?

    • If you are being claimed as a dependent, your limit would be around $6,000 dollars of earning that is exempt from taxation. If you are not being claimed as a dependent on another person’s return, your exemption limit is around $10,000 dollars. This exemption limit is for the income that you earn overall annually for the specific tax year.

  24. MkA says:

    I been filing exempt for the last 3 montrhs how long is the recommended time to do it before changing it back?

    • The IRS gives no maximum time that you may be on an exempt status. You must balance the potential tax bill with the zero interest loan you give the IRS if you withhold too much at end the year. Your personal tax deductions and general tax situation should gauge your request for exemption. If you have high deductions you may be able to balance out a longer time being classified as exempt. If you typically pay taxes each year as opposed to getting a refund, filing exempt will likely make this situation worse. Please utilize the IRS withholding calculator to monitor this status.

  25. Amy says:

    Hey ,I am married and have one child and I tried to claim exempt on my W-4 online like my employer told me but it shows up that I can’t because of my marital status (married) .Do I can’t claim exempt if I am married?

    • You should claim exempt only if you are certain that you will not be tax liable for that specific year or if you did not have any income tax withheld previously. As to why your online W-4 is not allowing you to claim this qualification if you meet both of these requirements, we will not be able to further advise you on this matter.

  26. Donald says:

    I had to pay taxes last year, can I still file exempt. I also do not have a tax liability.

  27. Aisha says:

    Hello,

    I am a student on an F-1 visa. I did a little research and saw that as a non resident alien authorized to work part time on campus, i am not supposed to put exempt on my W-4. I had no idea about taxes when filing my W-4 and my supervisor told me to put “exempt”. I emailed her to change it but i have already been working all summer. Am i still going to get fined or can she just contact payroll and get it fixed?

    I also did claim taxes last year and got a tax return.

    • If you claim exempt on your W-4 and you were not eligible, you can be subjected to a tax bill and possible penalties. You are responsible for what you report on your W-4. If you made an honest mistake, you may not be penalized. It is advised that you contact an IRS representative on 1-800-289-1040 to address this issue.

  28. Ana says:

    Hello,

    I recently filed a W-4 for a new job, but I’m really confused over the exemption part. I’m afraid I filled it out wrong after claiming exempt. What are the benefits of claiming exempt? Is it better to not have taxes taken out of my paycheck throughout the year? I’m single, independent, and claiming one allowance.

    • Hello Ana,

      The benefit of filing ‘exempt’ is that you will not have any taxes withheld during the year. But if it is determined on your tax return at the end of the year that you are not exempt from paying taxes, you will have a very high tax liability to make up for all the taxes that were not withheld from your pay all year. It is not recommended that you claim exempt unless you are absolutely sure you are indeed ‘Exempt’ from paying taxes. Thank you.

  29. Jermaine Grove says:

    I was wondering can I claim exempt for the last 4 months of the year since I’ve had taxes took out the first 8 months .I have a tax liablility bill from last year & don’t want to get a penalty for claiming exempt

    • I would advise against claiming exempt for the last 4 months, as this is dependent on how much you are earning for the remainder of the year as well as your personal situation. If you are single, with no children, it may be best to claim 2 allowances.

  30. Grace says:

    Hello,

    I’m a college student and working as part time. If I put exempt on my W-4 doesn’t that mean I’m exempt from all the taxes which includes FICA, Federal, State, and Local?

    Thank You!

    • Hello Grace,

      You will first need to be eligible to claim exempt on your W-4 such as not having a tax liability from the prior year and had all right to a federal refund, and you expect to have no tax liability for the following tax year. This exemption only applies to federal income tax. We advise you follow all instructions on your W-4 and ask for further assistance from your employer.

  31. Robert says:

    I was 1099 for 2015/2016. I owe back taxes which I am paying monthly for 2015. I filed for an extension for 2016 and will be paying towards that starting in October. for 2017 I switched to W4 and I currently have an allowance of 8 due to my multiple write offs as a outside sales rep.

    Am I eligible to claim exempt on one or two of my paychecks this year?

    • Because you are claiming a large number of allowances, this may result in a high liability if your write offs are not qualified. As to whether or not you can claim exempt on one or two of your paychecks, it may be best to be conservative and consult with a local accountant before doing so.

  32. Temeka says:

    Hello I’m been on my job 3 years now and my children are grown this year and I moved out of state can I go except for the remaining of the year or for only 2 months without problems from irs I do not plan on claiming on taxes

    • Hello Tameka,

      In order to claim exempt on your W-4, you must have had no tax liability for the previous year and must expect to have no tax liability for the current year. You may go to the IRS website to determine if you can claim tax exempt. Be advised that if the IRS deems that you are reducing your tax withheld without qualifying, there is a penalty of $500.

  33. Cori C. says:

    I am getting a bit bonus and don’t want to be taxed on it right now. I’m planning to temporarily change my withholdings so I can get the full bonus now (and pay the tax on it later). The change will only be in effect for two months. Can I claim exempt for those two months, or is there a better way to ensure I’m taxed as little as possible for this two-month period?

    • Tax advisor says:

      You will need to speak with your employer on any changes you would like to make to your W-4. The more allowances that you claim, the fewer taxes get withhold during the specific pay period, but you must ensure that you are updating your W-4 when the period is over. If you choose to claim more allowances or exempt, not only is your bonus taken into consideration but your regular income earned throughout the year as well. This may result in a higher tax liability at the end of the year, so do so at your own discretion.

  34. Maurice A Fain says:

    What’s the max time allowed to file exempt on you pay check before u have to report it? 3 months?

  35. Greener says:

    I was recently deployed as a federal asset for a natural disaster. The payment I will receive will be process through my orginization. My question is in regards to minimizing the amount of tax withheld due to the size of the check. I understand that I can make changes to my W-4, but I am unsure of what I can/cannot change. I am single and claim low exemptions for my regular salary. This would be a one time adjustment for this income. Thanks!

  36. Anthony says:

    Hi i have never done taxes i have been a dependant for my whole life and now i have a job that is 6 days 10 hour shifts and i want to claim exempt for at least a month what is my best bet? I am single unmarried didnt pay taxes last year because i was a dependant

    • If you wish to claim exempt for at least a month, it’s best for you to keep track of when that month is over. There is no guarantee that you would not have a tax liability because of a whole month of having an income being tax-exempt. You can, however, speak to your employer after that month to change your W-4.

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