While school is out this summer, your teenage child may work full time or part time. Of course, income taxes will be withheld from those wages, even if your child won't have any income tax liability for 2005.
Strategy: To help your children keep more money in their pockets, tell them to write the word "EXEMPT" on Line 7 of their W-4 forms.
Not every child qualifies for this tax break; it won't work if the child will earn big bucks this year.
It's only available to a child claimed as a dependent if he or she had no tax liability for 2004 and will earn $5,000 or less in 2005. If your child exceeds the $5,000 limit, he or she would need to fill out a new W-4.
Tip: The exemption is good only for one year. If your child was exempt last year and is working at the same summer job, he or she must file for a new exemption.
- Small Business Tax Deduction Strategies No matches