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Exempt status may be claimed on a 2010 W-4 if two conditions exist:

1. You did not have a tax liability in the prior year and therefore received a refund of everything that was withheld, and

2. You expect to have not tax liability this year.

Caution: Having no tax liability is not the same as owing no tax. If your tax withholding was $1,000 last year and your tax liability was $400 then you owed no additional tax. You received a $600 refund. But your tax liability was $400.

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Q: What does exempt status mean on the W4 form?
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http://taxes.about.com/od/preparingyourtaxes/ht/W4.htm


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