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Are Full-Time Students Exempt from Taxes?

Students are not exempt from taxes and have the same filing requirements as everyone else

Already beleaguered college students will be disappointed to learn that there is not a tax exemption for students, full-time or otherwise.

Whether you have to file a return depends on

  • your income amount (earned and unearned)

  • whether someone else claims you as a dependent

  • your filing status

  • your age

If your level of income is below the filing requirement for your age, filing status, and dependency status, then you don’t have to file a return. Conversely, if your income level is above this filing requirement, you must file regardless of whether you are a student.

You can see the filing requirements for most non-dependent situations below: Continue reading “Are Full-Time Students Exempt from Taxes?”

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Help Filling Out a W-4

Your W-4 is an important thing to get right because it ultimately decides how big your tax refund is – or if you owe the IRS money

If you are an employee, you pay income tax through withholding – tax money your employer takes out of your paycheck each pay period.

You can determine how much gets taken out by filling out Form W-4 [Employee’s Withholding Allowance Certificate]. If too much gets taken out, you will receive a refund when you file taxes. If not enough is taken out, you will have to pay the IRS.

You will be asked to fill out a W-4 when you start a new job. But you can also fill out a new W-4 any time if you wish to adjust your withholding. You should especially be sure to do so after major life events such as getting married or the birth of a new child.

How to Fill Out the Form

The first part of the form should be easy enough. It’s just your personal information: name, address, social security number, etc. Continue reading “Help Filling Out a W-4”

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Federal Tax on Military Retirement Pay

Most military retirement pay is treated (and taxed) as normal income, but in certain cases it can be excluded

In the eyes of the federal government military retired pay is no different from any other form of income, which means that you have to pay income tax on it.

Generally payment you receive as a member of the military is taxed as wages. But retirement pay is taxed like a pension. If your retirement pay is based on age or length of service it is taxable and must be included on your tax return on the section for pensions and annuities (this is line 16 on the actual Form 1040 [U.S. Individual Income Tax Return]).

In fact taxes should be withheld from your retired pay before you even get it. How much is withheld depends on how many exemptions you claim on your Form W-4 [Employee’s Withholding Allowance Certificate] after retirement. You can change how much tax is withheld by completing a new W-4. Claiming 0 exemptions means that the maximum amount of tax will be withheld; the more exemptions you claim the less will be withheld.

In January after the end of the tax year you should receive a Form 1099-R [Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.] showing how much retired pay you received and how much tax was withheld. You must report this information on your tax return. Continue reading “Federal Tax on Military Retirement Pay”