I'm a student right now, living with my parents, and I'm about to take a position in Alaska for the next 6 months. It will be paying $160 a week, with housing covered as part of the position. I am 18 years old, and I file income as a dependent with my parents. I do not want them to pay anything extra at tax season, but I don't want a refund, so I can get the maximum amount of money that I need for food and travel. What's the best way to fill out my W-4? Does anyone have any experience with this?
If you earn $160 a week for 26 weeks, are unable to claim yourself, have no other income at all, you will earn $4,160, which falls under the standard deduction, in your case a bit over $4,500; per publication 17, it is $350 above your earned income, to a maximum of $6300 as of 2016. (H/t Hart CO for the reminder.)
In that case, if you paid no taxes (at all) last year (either did not file or filed and had 0 tax paid, so got a 100% refund), you could legitimately claim "exempt" by writing that on line 7.
However, you would be very close to owing taxes, so if you have any unearned income (interest from bank accounts, dividends from your non-sheltered college fund, etc.), you would possibly owe taxes. You're also going to owe taxes if you have another ~$2150 of earned income from any other source (including things like mowing lawns, tutoring, etc.). Keep all of that in mind if you have any other sources of income other than the above.
There are ways to avoid having federal income taxes withheld:
In order to avoid withholding altogether, you’ll have to fall into both of the following categories: you have no tax liability this year and you had no tax liability in the previous tax season, so all of the federal income tax you paid was given back to you. Generally, you can say you have no tax liability when you’re not required to file an income tax return or you owe zero taxes. You may also be able to claim an exemption if your earned income for the year is extremely low ($1,050 or less).
If those conditions apply to you, you can write “exempt” in line 7. Keep in mind that the exemption only eliminates your federal income taxes, not your Medicare or Social Security.
If your parents use an accountant to prepare their taxes, I'm sure he/she would be able to give you a solid answer on how to fill it out.