Some Working Students May be Exempt from Federal Income Tax Withholding

This page last updated on
December 26, 2003

Tax Break for Some Working Students
You May Not Be Subject to Federal Income Tax Withholding

Working students may be exempt from withholding if:

They can be claimed as a dependent (usually on a parent’s return);

Their total 2003 income is not over $4,750;

Their unearned income (interest, dividends, etc.) does not exceed $250; and

They had no income tax liability for 2002.

Social security and medicare taxes will still need to be withheld, but skipping unnecessary income tax withholding will put more money in your pocket now.

If you receive customer tips, those tips are taxable. Keep track of the amounts, include them on your tax return, and report them to your employer by the middle of the following month if they total $20 or more.

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Tax Break for Some Working Students You May Not Be Subject to Federal Income Tax Withholding

Tax Break for Some Working Students
You May Not Be Subject to Federal Income Tax Withholding