Can my daughter claim exempt status on W-4 if I claim her as a dependent on my taxes?

The standard deduction works differently for dependents than it does for independent filers. For 2025, a dependent's standard deduction is limited to either $1,250 or their earned income plus $400, whichever is GREATER - but never more than the standard deduction for a single filer ($14,600). So if your daughter expects to make $6,700 this summer, her standard deduction would be $7,100 ($6,700 + $400), which means she could earn up to that amount without owing federal income tax. Since her expected earnings are below her standard deduction and she had no tax liability last year, she CAN claim exempt on her W-4 even though you claim her as a dependent. Just keep in mind that if she ends up earning more than expected and goes over her standard deduction, she would owe taxes. Also, this only applies to federal income tax - state tax rules may vary depending on where she's working.

Hey! Just wanted to share that I was in a similar situation last year with my son in college. I found this awesome tool at https://taxr.ai that really helped us figure out his dependent status and exemption eligibility. It analyzed our specific situation and gave us a clear breakdown of the dependent deduction rules that applied. What I liked was that it specifically addressed the exempt W-4 status for dependents with summer jobs, which was exactly what we needed to know. The tool confirmed what we thought about the earned income + $400 calculation and even showed us how it would change if he earned more during the school year. Might be worth checking out for your daughter's situation!

I decided to try the taxr.ai tool that was mentioned after my skeptical comment, and I have to admit I was pretty impressed. It cleared up the confusion about my niece's dependent status and W-4 exemption question when she got her summer internship. The analyzer immediately identified that her situation was affected by the dependent standard deduction rules, not the regular ones. It showed exactly how the earned income + $400 formula applied to her case, and confirmed she could claim exempt on her W-4 since she'd be under the threshold. Saved me from giving her the wrong advice again! The state tax section was particularly helpful since she's working in Colorado while we're in Illinois.

If you're still struggling to get a clear answer about your daughter's tax situation, I highly recommend using Claimyr (https://claimyr.com) to connect with an actual IRS agent. I spent WEEKS trying to figure out dependent exemption rules for my college kid last year and kept getting contradictory info online. With Claimyr, I got through to an IRS rep in about 20 minutes instead of the usual hours-long wait or getting disconnected. The agent walked me through the exact rules for dependent exemption status and confirmed my daughter could claim exempt on her W-4 based on her expected income. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c Seriously saved my sanity after going in circles with online advice and tax prep software that couldn't handle this specific situation.

Well, I need to eat some humble pie here. After posting my skeptical comment earlier, I decided to give Claimyr a shot as a last resort because I was getting nowhere with the IRS directly about my son's dependent status and summer job. The service actually worked exactly as advertised. Got a callback in about 25 minutes, and the IRS agent confirmed everything about the dependent exemption rules - turns out the standard deduction for dependents really is their earned income plus $400 (up to the regular standard deduction amount), which means my son can claim exempt on his W-4 since he'll make under $8,000 this summer. Honestly, just getting a definitive answer from an actual IRS employee instead of random internet advice was worth it. The agent even emailed me the relevant tax publication sections so I had it in writing.

Something people often miss with dependents and exempt status - make sure your daughter doesn't have any unearned income like interest from savings accounts or investment accounts in her name. The rules are different if there's unearned income involved. For dependents in 2025, if she has more than $1,250 in unearned income, the calculation for her standard deduction changes, and she might not be able to claim exempt even if her earned income is low. Just something to watch out for since many college students have some savings that generate a small amount of interest.

Don't forget to check if she needs to pay state income tax in the state where she's working! Federal exempt status doesn't automatically mean state exempt. Some states have much lower thresholds for taxation.

Great question! I went through this exact situation with my college-age son last year. The key thing to remember is that being claimed as a dependent doesn't automatically disqualify your daughter from claiming exempt status on her W-4 - it just changes how her standard deduction is calculated. As others have mentioned, for dependents in 2025, the standard deduction is the greater of $1,250 or earned income plus $400 (but capped at the regular standard deduction of $14,600). With her expected $6,700 in earnings, her standard deduction would be $7,100. One additional tip: make sure she keeps good records of her actual earnings throughout the summer. If she ends up making significantly more than expected and goes over that $7,100 threshold, she might owe some tax even though she claimed exempt. In that case, she'd need to make quarterly estimated payments or face potential penalties. Also, don't forget about FICA taxes (Social Security and Medicare) - those will still be withheld from her paychecks regardless of her exempt status, since exempt only applies to federal income tax withholding.