Butch

I have a question about whether I qualify for exemption from withholding.

As many of you know, I am in the middle of getting my MBA. Today, I started my summer internship in between my two years, and I need to fill out my W4. I may qualify for withholding exemption, but I'm just not sure. It would be a huge help if I did, since I am a student and would love as much cash flow over the summer as possible!

From the W4 form:

“I claim exemption from withholding for 2009, and I certify that I meet both of the following conditions for exemption.

• - Last year I had a right to a refund of all federal income tax withheld because I had no tax liability and
• - This year I expect a refund of all federal income tax withheld because I expect to have no tax liability.”

I expect to have no tax liability this year, since my only income will be what I earn over the summer at the internship.

Here's the big question. Last year, I had no income tax liability since I was working in Germany and paid German taxes. However, I didn't get a refund of tax withholding, since I had nothing withheld.

Does my 2008 situation qualify for a withholding exemption based upon bullet 1? Please answer only if you know the answer. I can think of several reasons for and against why it should qualify, but I need a knowledgable answer.

Thanks!

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clutchy

you can put whatever you want on there. It doesn't matter what you put but you will get mild penalties if you owe more than say $1000 than you paid in.

Don't forget your 1098-T and form 8863. Student loan interest paid is also deductible.

It's a bummer but they just beefed the HOPE credit to all 4 years now and it's refundable... unfortunately you've made it past that point.

extraneous info:

also there is an $8k refundable credit for buying a house if you're a first time buyer or haven't bought on in 3 years and it's your primary principle residence. Close by nov. 30 09.

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LK was treated unfairly

thanks X

Butch

Thanks for the insight! Unfortunately, I no longer qualify for deductions on student loan interest nor the Hope credit, but so long as I can get all my cash up front for the summer, that will still help a lot!

clutchy

why not on student loan interest deduction? no loans? lol.

Butch

Tons of loans (don't even want to think about that), but you can only claim undergrad loans for so long . . . and I'm definitely past that. Haven't paid interest on the MBA loans yet.

clutchy

woof, sorry to hear that. I'm sitting on a little less than 30k...

Butch

I'll be around $150,000 by this time next year (pretty much all from the MBA). Not sure if I can even deduct the interest on grad school loans. I guess I'll figure that out next year.

clutchy

you can deduct it for up to five years. It's the same for grad loans as well.

It gets phased out though at a pretty low agi.

cheapie

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johnnymk

And to think I was griping about my 9K total cost for five years at Drexel.