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Catherine Neuberger · Sep 4, 2007, 09:25 AM

My daughter is a new graduate student at Tulane University in New Orleans. She is receiving a stipend of 18k and tuituion.
How should she file her w-4 to minimize the taxes taken from her paycheck. She will be claiming herself

AtlantaTaxExpert · Sep 4, 2007, 09:41 AM

Are YOU claiming her as a dependent, or is she going to claim herself?

Makes a BIG difference!

Catherine Neuberger · Sep 4, 2007, 09:52 AM

I will not be claiming my daughter

AtlantaTaxExpert · Sep 4, 2007, 09:59 AM

That being the case, the first $8,700 of her income is exempt from federal income taxes, which leaves only $9,300 subject to tax, most of which will be taxed at 10%.

Figure her TOTAL tax liability will be around $1,000.

Technically, she could have ZERO money withheld for taxes and pay the $1,000 with her tax return. There would be NO under-withholding penalty since the amount paid is less than $1,000.

Remember that ANY refund is an interest-free loan to the government.

However, I do NOT recommend that, because most students would have a problem coming up with a THOUSAND dollars to pay their tax bill come April 15th.

BOTTOM LINE: She should claim TWO exemptions on her W-4. That will cover her tax liability and get her a small-to-medium refund come next year.