Can I File Exempt & Still Get a Tax Refund?

Last tax season, more than 75% of taxpayers received a tax refund, and the average refund was close to $3,000. You can get started now with TurboTax and get closer to your tax refund, and if you have questions on your taxes, you can connect live via one-way video to a TurboTax Live tax expert with an average of 12 years of experience to get your tax questions answered from the comfort of your couch.

Our TurboTax Live experts look out for you. Expert help your way: get help as you go, or hand your taxes off. You can talk live to tax experts online for unlimited answers and advice OR, have a dedicated tax expert do your taxes for you, so you can be confident in your tax return. Enjoy up to an additional $20 off when you get started with TurboTax Live.

As you may already know, the IRS issues tax refunds when you pay more tax during the year than you actually owe. When you file exempt with your employer for federal tax withholding, you do not make any tax payments during the year. Without paying tax, you do not qualify for a tax refund unless you qualify to claim a refundable tax credit, like the Earned Income Tax Credit.

The tax law requires your employer to withhold federal income tax from each paycheck you receive and send it to the IRS on a quarterly basis. At tax time, your employer provides you with a W-2 Form that reports the total amount of taxes withheld during the year. When you sit down to do your taxes, if the taxes you owe are less than the total amount withheld, the IRS will send you a tax refund for the difference.

Generally, if you are self-employed and expect to owe $1,000 or more, you are required to make income tax payments every three months throughout the year. If you have questions, we have TurboTax Live Self-Employed tax experts, available in English and Spanish, to help you with your personal and business income and expenses. You can even just hand over your taxes to a TurboTax Live tax expert who can do them from start to finish with TurboTax Live Full Service.

Maximize your deductions and get every tax break you qualify for when you file your taxes with TurboTax Deluxe. We’ll search over 350 tax deductions and credits to make sure you get the maximum refund possible. Start for free, and get up to an additional $10 off TurboTax Deluxe when you file.

TheStreet Recommends

Filing exempt from withholding

When you start a job, your employer will ask you to fill out IRS Form W-4. The W-4 helps you estimate the amount that should be withheld from each paycheck based on the tax information you provide. To claim an exemption from withholding, you must meet certain criteria. If you had even $1 of tax liability in the prior year or anticipate earning income in excess of the sum of your standard deduction ($12,550 single, $18,800 head of household, $25,100 married filing jointly), you cannot be exempt from federal tax withholding in the current year.

For example, if you file as single on your 2021 taxes, you must not anticipate earning income in excess of the standard deduction of $12,550. If you still claim exempt from withholding and earn income in excess of this amount, you will probably owe some taxes unless you qualify for refundable tax credits like the Earned Income Tax Credit or the Child Tax Credit.

Update your W-4

If you are unable to claim exempt from withholding, you can still reduce the amount that is withheld from your paycheck by updating your W-4 and changing your withholding. There is a redesigned IRS W-4 now called the W-4 Employee’s Withholding Certificate instead of the W-4 Withholding Allowance Certificate that has been updated to reflect changes under tax reform.

The IRS W-4 was redesigned to align with changes under tax reform and to help taxpayers figure out their correct withholding after tax law changes. One of the biggest changes on the W-4 form was the elimination of personal allowances since allowances were tied to the dependent and personal exemption which was eliminated. The redesigned W-4 will take into account whether you can claim the Child Tax Credit and whether you can claim tax deductions other than the standard deduction, both of which can reduce your withholding.

Refundable tax credits

A refundable tax credit means that even if you have zero tax liability before claiming the tax credit, you may still get a tax refund. Refundable tax credits not only reduce the federal taxes you owe but also could result in a tax refund even if the tax credit is more than the tax you owe. For example, the American Opportunity Tax Credit that covers certain higher education expenses is 40 percent refundable and the Earned Income Tax Credit is fully refundable so if you are eligible for these tax credits you may see a tax refund even if you paid no income tax for the year.

Don’t worry about figuring any of this out. TurboTax will ask you simple questions and give you the tax deductions and credits you are eligible for based on your answers. Our TurboTax Live tax experts are available in English and Spanish, year-round and can review, sign, and file your tax return, or you can just hand your taxes over to them. All from the comfort of your home.

Trending Ideas

Featured Stocks On The Move

Daily Rundown

Top 3 Stocks in Leading Sectors
  • 3 Energy Storage Stocks To Buy Now

    Bloom Energy Corporation (BE) Bloom Energy Corporation designs and manufactures solid oxide fuel cells for on-site power generation. Their Energy Servers provide reliable, resilient, and sustainable energy solutions for various... Read More

  • 3 Steel Product Stocks To Buy Now

    Perma-Pipe International Holdings, Inc. (PPIH) Perma-Pipe International Holdings, Inc. specializes in engineered piping solutions for various industries, including oil and gas, district heating and cooling, and industrial applications. The company... Read More

  • 3 Oil Field Machinery Stocks To Buy Now

    Matrix Service Company (MTRX) Matrix Service Company provides engineering, fabrication, construction, and maintenance services to energy and industrial markets. The company operates through segments such as Storage and Terminal Solutions,... Read More

  • 3 Restaurant Stocks To Buy Now

    Brinker International, Inc. (EAT) Brinker International, Inc. is a leading casual dining restaurant company, operating well-known brands such as Chili’s Grill & Bar and Maggiano’s Little Italy. The company focuses... Read More

  • 3 Coal Stocks To Buy Now

    Natural Resource Partners L.P. (NRP) Natural Resource Partners L.P. is a master limited partnership that owns, manages, and leases a diversified portfolio of mineral properties in the United States. The... Read More

  • 3 Real Estate Developer Stocks To Buy Now

    IRSA Inversiones y Representaciones Sociedad Anónima (IRS) IRSA Inversiones y Representaciones Sociedad Anónima is a leading real estate company in Argentina, engaged in the acquisition, development, and management of diversified... Read More

  • 3 Gas Distribution Stocks To Buy Now

    New Jersey Resources Corporation (NJR) New Jersey Resources Corporation is an energy services holding company that provides regulated natural gas distribution services through its subsidiary, New Jersey Natural Gas. The... Read More

  • 3 Food Product Stocks To Buy Now

    The Chefs’ Warehouse, Inc. (CHEF) The Chefs’ Warehouse, Inc. is a premier distributor of specialty food products, serving high-end restaurants, hotels, and gourmet food stores across the United States and... Read More

  • 3 HVAC Stocks To Buy Now

    Featured Content Lennox International Inc. (LII) Lennox International Inc. is a global leader in energy-efficient climate control solutions, specializing in heating, ventilation, air conditioning, and refrigeration (HVACR) products. The company... Read More

  • 3 Hotel Stocks To Buy Now

    Featured Content Hyatt Hotels Corporation (H) Hyatt Hotels Corporation operates a global portfolio of luxury, full-service, and lifestyle hotels, as well as vacation properties. Known for its premium hospitality offerings,... Read More

  • 3 Tobacco Stocks To Buy Now

    Featured Content Turning Point Brands, Inc. (TPB) Turning Point Brands, Inc. is a consumer products company that manufactures and markets tobacco products and alternative smoking accessories. The company’s portfolio includes... Read More

  • 3 Life Insurance Stocks To Buy Now

    Featured Content F&G Annuities & Life, Inc. (FG) F&G Annuities & Life, Inc. specializes in annuities and life insurance products designed to meet the long-term financial planning needs of clients.... Read More