How to Claim Exempt From Federal Withholding Tax

If you don't expect to owe taxes, you can exempt yourself from withholding tax.

If your eligible tax deductions are greater than your taxable income, you will likely have zero tax liability for the year. If you are sure you will not have a federal tax liability, you can claim "exempt" status to prevent your employer from withholding federal taxes from your paycheck. Remember that claiming an exemption from federal income taxes does not exempt you paying Social Security and Medicare taxes.

Step 1

Make sure you qualify for the exemption. If you received a refund for the entire amount of your federal withholding amount for the previous tax year, and you expect to receive a refund for the entire amount of your federal withholding for the current tax year, you may be able to claim the exemption. If your income is more than $950 (and over $300 of that amount is unearned income, such as interest on bank accounts) and another person can claim you as a dependent, you can't claim the exemption.

Step 2

Obtain a copy of a W-4 form from your employer. Alternately, you can download a copy from the Internal Revenue Service website (see Resources) and then print a copy of the form.

Step 3

Enter your name, address, social security number, filing status and if your last name differs from that shown on your social security card in the appropriate spaces on the W-4 form. Write "exempt" on line 7 to claim your exemption from federal tax.

Step 4

Sign and date the W-4 form and turn it in to your employer's payroll department so your payroll withholding can be adjusted.

Warning

If you claim exempt status and end up owing federal taxes, the IRS may assess a penalty.

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