When Are You Exempt From Filing Taxes?

If you earn an income, you are typically required to fill out a W-4 form, which details your withholding allowances. Under certain circumstances, you may be able to claim an exemption from filing taxes. Claiming exemption when you are not exempt could result in a fine of $500, so be sure you are exempt prior to submitting your W-4.

Tax Liability Requirements

If you did not have a tax liability in the previous year and you do not expect to have any tax liability in the current year, you may be able to claim an exemption from filing your federal taxes.

Restrictions

If your income is more than $950 and you collected more than $300 in unearned income -- and someone can claim you as a dependent -- then you cannot claim the exemption. This limitation may change in future years, so be sure to check the IRS instructions for Form W-4 -- find a link in the References section -- before you fill out your form.

Exemption Status

Your exemption status lasts just one calendar year. You will need to fill out another W-4 by Feb. 15 of the following year to continue to claim the exemption.

Filing

To claim the exemption, you must write "Exempt" on Line 7 of your W-4.

Considerations

There are a number of scenarios -- such as selling your home -- that may affect your decision to choose exemption status (see Resources).

References

• IRS: Form W-4
• IRS Topic 753: Claiming Exempt Status on a W-4

Resources

• IRS: Do You Need to File a Tax Return?