W-4 and MW507 for Your First Job: When Teens Can Actually Claim Exempt
Most advice about claiming exempt on the W-4 tells you to write the word "Exempt" on the form. That's out of date. On the 2026 Form W-4, you check a box instead.
That small change is a good reason to slow down on your first day of work. You'll get two tax forms, the federal W-4 and Maryland's MW507. What you put on them decides how much tax comes out of every paycheck you earn this year.
Most teens can. A teen can claim exempt on the 2026 W-4 if they owed no federal income tax last year and expect to owe none this year. For a dependent whose only income is wages, that typically means earning $16,100 or less. Maryland's MW507 uses the same two-year test on Line 3.
Here's how to fill out a W-4 for a teenager, how to fill out the MW507, and when claiming exempt is the wrong call.
Key Takeaways
A worker can claim exempt from federal withholding on the 2026 Form W-4 only if they had no federal income tax liability in 2025 and expect none in 2026, according to the IRS Form W-4 instructions.
On the 2026 Form W-4, claiming exempt means checking the box in the "Exempt from withholding" section and completing only Steps 1(a), 1(b) and 5, not writing "Exempt" on the form.
IRS Publication 505 says a dependent can't claim exempt if their 2026 income is more than $1,350 and includes more than $450 of unearned income, such as interest or dividends.
Maryland's Form MW507 lets students and seasonal workers write EXEMPT on Line 3 if they owed no Maryland income tax last year and expect to owe none this year.
Both exemptions last one year: a new W-4 is due by February 16, 2027, and a new MW507 by February 15 of the following year.
Can a teenager claim exempt on a W-4?
Yes, if two conditions are both true. You owed no federal income tax last year, and you expect to owe none this year. Age doesn't decide it, and neither does being a student. The IRS says a student isn't automatically exempt, but part-time and summer workers often qualify because they earn too little to owe income tax.
The two conditions come straight from the 2026 Form W-4 instructions. A teen who never worked before passes the first one automatically, because no income means no tax owed last year.
The second condition is about this year's earnings. The IRS set the 2026 standard deduction at $16,100, and a dependent whose only income is wages generally owes no federal income tax at or below that amount. Most first jobs land well under it.
One limit catches teens with savings. IRS Publication 505 says a dependent can't claim exempt if their income is more than $1,350 and includes more than $450 of unearned income, like interest or dividends. You'll see a $350 figure online. That number is out of date.
Here's an illustrative example. Baltimore's YouthWorks summer jobs program ran June 29 to July 31 in 2026, with youth working up to 25 hours a week. At $15 an hour, a full summer comes to about $1,875. A teen with that job and no investment income meets both conditions easily.
Should a 17 year old have taxes withheld?
A 17 year old who qualifies can choose either way. Claiming exempt means a bigger paycheck now. Letting federal tax come out is also fine, but the teen then has to file a tax return to get that money back as a refund.
That second path is where money gets lost. Plenty of first-time workers never file, so the withheld tax just sits with the IRS. If your teen won't file a return, claiming exempt is usually the better choice, as long as they qualify.
How to fill out a W-4 for a teenager (2026 form)
To fill out a W-4 for a teenager who qualifies as exempt, complete Step 1(a) with your name and address and Step 1(b) with your Social Security number. Then check the box in the "Exempt from withholding" section. Skip every other step, including the filing status in Step 1(c). Sign and date Step 5. That's the whole form.
There's no special W-4 for minors. Teens use the same form as every other employee, and most teens fill in only a few lines of it.
Step by step:
Step 1(a): your legal name and home address.
Step 1(b): your Social Security number.
Exempt from withholding: check the box. Checking it certifies that you meet both conditions.
Step 1(c) and Steps 2, 3 and 4: leave them blank. The IRS instructions say an exempt worker completes only Steps 1(a), 1(b) and 5.
Step 5: sign and date.
The 2026 W-4 also has new deduction lines in Step 4(b), including qualified tips and overtime. An exempt teen doesn't fill those in. They only matter if you're having tax withheld.
If your teen doesn't qualify for exempt, the W-4 is still short. Complete Step 1, check the single box in Step 1(c), and leave Steps 2 to 4 blank unless they have a second job. Step 2 is the place to account for a second job, so withholding isn't too low across both.
How to fill out the MW507 as a student in Maryland
To fill out the MW507 as an exempt student, write EXEMPT on Line 3. Maryland's Line 3 applies if you owed no Maryland income tax last year and expect to owe none this year. The form names "Students and Seasonal Employees whose annual income will be below the minimum filing requirements" as people it covers.
The 2026 Form MW507 from the Comptroller of Maryland lays out the lines:
Name, address and county: your county of residence sets your local tax rate, so put your home address, not your job's.
Line 1: personal exemptions, for workers who aren't exempt.
Line 2: extra withholding per pay period, usually blank for a teen.
Line 3: write EXEMPT here if you qualify.
Lines 4 to 8: for out-of-state residents, local-tax situations and military spouses. A typical Maryland teen leaves them blank.
For context, Maryland's 2025 resident instructions say a single dependent doesn't have to file a Maryland return unless gross income reaches $15,750. A summer or part-time job rarely gets there.
One line on the MW507 surprises employers more than teens. If you claim exempt on Line 3 and your wages are expected to top $200 a week, the form says your employer has to send a copy of your MW507 to the Comptroller's Compliance Division. That's routine paperwork, not a sign of trouble.
If you've never seen how Maryland county tax shows up on a paycheck, D2D's guide on how to read a pay stub explains why it often hides inside the state tax line.
What claiming exempt does not stop
Claiming exempt only stops income tax withholding. Social Security and Medicare still come out of every paycheck, at 6.2% and 1.45% of wages. Starting in January 2027, most Maryland paychecks also have a new FAMLI deduction for paid family and medical leave.
Here's what changes and what doesn't:
Paycheck line | Exempt teen | Teen not claiming exempt |
|---|---|---|
Federal income tax | Not withheld | Withheld |
Maryland state and county income tax | Not withheld | Withheld |
Social Security (6.2%) | Withheld | Withheld |
Medicare (1.45%) | Withheld | Withheld |
Maryland FAMLI (starts January 2027) | Withheld unless the employer covers it | Withheld unless the employer covers it |
So an exempt teen earning $300 a week still sees about $23 come out for Social Security and Medicare. D2D explains the new Maryland FAMLI payroll deduction, up to 0.45% of wages in 2027, in its own guide.
Exempt expires: renew by February 2027
An exempt claim lasts one year. The 2026 Form W-4 says you need to submit a new W-4 by February 16, 2027 to stay exempt, and the MW507 says a Line 3 exemption needs a new certificate by February 15 of the following year. Miss the deadline and your employer starts withholding tax again.
That's the step most teens forget, especially with a job that runs past New Year's. A holiday job that turns into a year-round job needs fresh forms in February.
Set a reminder for late January. If you still qualify, fill out new copies of both forms and hand them to your employer before the deadline.
When your teen should not claim exempt
Don't claim exempt if your teen is likely to owe tax this year. That includes a teen who expects to earn more than $16,100 across all jobs in 2026, a dependent with more than $1,350 of income including over $450 of unearned income, and anyone who owed federal or Maryland income tax last year.
Side income is the gray area. A teen with $400 or more in net self-employment earnings, from babysitting, lawn care or reselling, has to file a federal return and may owe self-employment tax. Talk with a tax preparer before that teen claims exempt on a regular job's W-4.
The stakes are real but small for honest mistakes. Publication 505 says the IRS can charge a $500 penalty when someone makes W-4 statements that reduce withholding and has no reasonable basis for them. A teen who checks the box in good faith, based on a summer job's pay, has a reasonable basis.
Teen W-4 and MW507 FAQ
Do you have to file a new W-4 every year if you claim exempt?
Yes. A W-4 exemption covers one year. For the 2026 form, the IRS says to submit a new W-4 by February 16, 2027. Maryland's MW507 Line 3 exemption also needs a new form by February 15 of the following year.
Is a full-time student automatically exempt from federal income tax?
No. The IRS says being a student doesn't make you exempt. What matters is whether you owe tax. Many students qualify anyway, because a part-time or summer job usually pays less than the $16,100 standard deduction for 2026.
Does claiming exempt mean my teen doesn't have to file a tax return?
Not necessarily. Claiming exempt only stops withholding. A dependent still has to file if wages pass the filing threshold or if they have $400 or more in net self-employment earnings. For how filing can affect benefits, see whether a teen's paycheck counts for SNAP, Medicaid or housing.
What if my teen already had federal tax taken out?
File a federal tax return to get it back. Maryland works the same way: the 2025 Maryland instructions say you must file a Maryland return to claim a refund of Maryland tax withheld, even if you weren't required to file. Your teen can also turn in a new W-4 and MW507 claiming exempt for the rest of the year.
How do I hire my kids and pay them tax free?
Not fully tax free. The IRS family employee rules say a child under 18 working for a parent's sole proprietorship, or a partnership where each partner is a parent, doesn't pay Social Security or Medicare tax. Income tax withholding still applies, so the child still needs a W-4.
What to do on your first day
Most teens with a first job can claim exempt on both forms. On the 2026 W-4, check the "Exempt from withholding" box and complete only Steps 1(a), 1(b) and 5. On the MW507, write EXEMPT on Line 3. Then set a reminder to renew both by mid-February.
If you're still waiting on paperwork, start with the Maryland work permit. Then learn what to do with the paycheck you get to keep. Diapers 2 Deposits runs budgeting, credit and saving lessons in its financial literacy classes for students, and its Game of Life simulation starts every participant at a Payday station before they budget a dollar.
This article is general information, not tax advice. For your specific situation, talk with a tax professional, the IRS, or the Comptroller of Maryland.
Whitney Ramirez is an Accredited Financial Counselor (AFC) and the Founder and CEO of Diapers 2 Deposits, Inc.
