Dependant on tax form

I am currently a dependant on my father's taxes and the last three years I have had to pay taxes. I am 21 years old and a junior in college and I do not work during the school year. I only work during the summer and I make about $3500 a summer. I paid taxes of about $700 last year because I am self-employed and have no company to take taxes out for me. I thought that if you made less than $5,000 you didn't have to pay taxes but my father's accountant says I do. I was wondering if you could tell me if I really do have to pay taxes and whether I should still be a dependant on my father's taxes for his tax purposes or if that is really hurting me. If I shouldn't have paid taxes is there any way to get money that back? Thank you very much.

John S.

The way the law works is that if you qualify as your father's dependent, you don't get to decide whether it would be better if you claimed your own exemption. Either he gets it or no one does.

Now, as to the taxation question. Because you are a dependent, you are not allowed to claim your personal exemption. If you could, that would protect $2,900 of otherwise taxable earnings.

You do, however, get a standard deduction equal to your earned income plus $250 -- up to a maximum deduction of $4,550.

If you had no investment earnings and your only earnings in 2001 were $3,500 in wages from that summer job, then you're right and your dad's accountant is wrong. You don't owe tax and, in fact, you don't even have to file a return. If you had more than $250 in investment earnings, though, you must file and you will probably owe some tax.

--kevin mccormally
editorial director
kiplinger's magazine