<prompt> Human: I ask how and they say they file exempt. What exactly does that mean? And dont they have to repay that?? I live in Georgia if that matters. Edit: one coworker in question is a 17 yrs old high schooler. No kids.  <response>: When you declare exempt on your W-4 they dont withhold any pay for income tax.Youre only supposed to declare exempt if you didnt owe anything last year and you dont expect to owe this year.And no its not a free pass. If they end up owing they will have to pay along with potentially underpayment penalties and interest when they file. Likewise if you have paid too much, youll get a refund.The ideal situation is to be as close to even as possible, with the best being that you owe or are owed zero for income tax.Use the W-4 calculator learn how to fill out your W-4. 