Income Tax

[Raptor9]

I got my first full time job this summer, and I'm curious if anyone can answer my tax questions. Let's just say I make 2000 dollars net sallary, without any withholdings--the W-4 form I filled out doesn't seem to take into account how long you're going to be working, so I'd imagine that I'll be getting as much withheld as if I was making $640 every two weeks for the rest of the year. However, my real income will actually be much closer to the previously mentioned 2000 dollars--my question is, is that amount even taxable or will I get all my money back when I file a return? I'm just a teenager working a summer job, so I don't really have any signifigant exemptions or deductions. I'd appreciate it if the more financially inclined individuals out there could shine some light on the situation.

P.S. I filled out two income tax calculators to try and solve this problem on myown--one said I didn't owe anything, and one said I owed ~$180, although the discrepancies between the two make me doubt their accuracy. Also, I'll be filing a return in the USA.

 

[HeroOfPellinor]

You're taxed not on how long you'll be working, but on your pay frequency. (Its an automatic calculation done by the payroll software the place you work for uses) If you're payed bi-weekly, then to figure out your yearly salary to determine your tax bracket, they'll multiply your salary by 26.

You'll either need to declare 9 withholdings (the most you can declare without needing to file papaerwork with the IRS) on your W4 or have the payroll department manually adjust your taxes....i.e. have them take a flat percent or flat amount or change your pay frequency to monthly even though they pay you bi-weekly (which they may or may not want to go through the hassle of doing if you're temporary).

Or just file taxes in January and get your refund.

 

[HeroOfPellinor]

 

[kranky]

Link for student tax information.

You may have been exempt from withholding altogether depending on your total income for 2005, but since they started withholding tax I guess it's too late now. I don't know if you can file a W-4 claiming exemption from tax once they've already started.

 

[Raptor9]

So, would 2000 bucks be very heavily taxed, or would I get most of it back? I've read that the standard deduction is 4850--would that give me a taxable income of $0. or is that not even how it works?

 

[CPA]

Originally posted by: kranky
Link for student tax information.

You may have been exempt from withholding altogether depending on your total income for 2005, but since they started withholding tax I guess it's too late now. I don't know if you can file a W-4 claiming exemption from tax once they've already started.

beat me to it. The W4 allows you to claim an exemption from income tax withholding.

 

[kranky]

Hey, I was just keeping your seat warm until you got here, CPA.

 

[Raptor9]

I actually haven't gotten my first paycheck yet, so I could still try it. Thanks for the link--although after reading it, I have some questions. Since I don't plan on making over $4850, does that mean I can write exempt on my W-4 and not have anything witheld, or just that I don't have to file a tax return? Is $4850 the minimum you have the make in a year to get taxed? Also, does the fact that I'm still my parents dependent change that?

 

[kranky]

Originally posted by: Raptor9
I actually haven't gotten my first paycheck yet, so I could still try it. Thanks for the link--although after reading it, I have some questions. Since I don't plan on making over $4850, does that mean I can write exempt on my W-4 and not have anything witheld, or just that I don't have to file a tax return? Is $4850 the minimum you have the make in a year to get taxed?

As I understand it, if:

- Your total income for 2005 is under $4850
AND
- Your unearned income (dividends, interest, etc.) was less than $800
AND
- You are single
AND
- You will be claimed as a dependent by your parents
AND
the total of your unearned and earned income is less than the larger of $800, or
your earned income plus $250

Then you can fill out EXEMPT on your W-4 and have no federal tax withheld from your pay. You don't have to file a return, either.

 

[Raptor9]

What's the difference between total income and the sum of earned and unearned income?

 

[Raptor9]

Nevermind--the way that reads, I'm exempt because I don't have any unearned income, so the total of my earned and unearned income can't be more than my earned income plus $250. Is this correct?

 

[Suspicious-Teach8788]

My first paycheck came out to be 616.75 out of the original $675. Go figure. If you're going to make 2k dont worry. I'm making more this summer and so it shouldn't be too bad.

You will be exempt dont worry.

 

[kranky]

If you don't have any unearned income, you only have to worry about the $4850 total income cut-off. So if you earn less than $4850 this year, you are a dependent, and you are single, you are exempt from withholding and you don't have to file a tax return.

 

[Raptor9]

Hey, that's amazing. Thanks for saving me the time and money, I owe you one.

 

[Suspicious-Teach8788]

Bleh my parents put so much money in my name I always have to file anyways >< Plus I dont get financial aid =/

 

[EagleKeeper]

It is usually best to file a return if you have a decent size income. The employer will be reporting it to Uncle and later on, Uncle may ask why you did not file.

Also, by filing, Uncle gets a record of your SS (FICA/Medicare) taxes properly recorded. And you will lose the 7% of your gross income to SS taxes.

Clarification:
By filing it ensures that an employer will nto be able to withhold any taxes from you and not report it to Uncle. Some employers when they get in a financial find may do this.

Also, by you filing, it can allow early detection of fraudelent activity of some-one else using your SS# for illegal or accidental purposes.

People using your SS# may not file however, the income may be reported causing fraud flags to be raised.

 

[kranky]

Originally posted by: Raptor9
Hey, that's amazing. Thanks for saving me the time and money, I owe you one.

You're welcome. I have to be extra-helpful now as now that I've I hit 10K posts my Elite status is up for review by the mods.