I'm of the firm belief that giving the government an interest-free loan of your money for the year is a little too nice and that you could put your
own money to better use with each paycheck (assuming that you don't waste it). Although some people enjoy the emotional component of receiving a fat refund, it's much better for your bottom line if you had that money to begin with.
As a dependent of your parents, you won't be able to claim your personal exemption, but you can still claim the standard deduction, which for 2008 is $5450. (Means that you don't have to pay taxes on the first $5450. Some additional tax deductions or credits might apply to you (like the Hope or Lifetime credits) so you might be able to make more and still have it tax-free.)
Disclaimer: This post is not professional tax or legal advice. Just stating some facts + saying what I did when I started working in college.
Freshman year I was clueless about employment and taxes, and when presented with the W-4 form for tax withholding I was confused and intimidated, and when I asked HR for minor help they said they weren't allowed to help me -- I was like WTF?. I thought there would be horrible consequences if I got the numbers wrong.
Anyways, the W-4 might look familiar to you:
http://www.irs.gov/pub/irs-pdf/fw4.pdf?portlet=3
What
I did (once again, not giving you advice here) was start writing "EXEMPT" in Box 7, and you might want to look into that based on how much you "plan" on working this year at your part-time job. In many cases, it's worth it since you'll be getting it all back anyways, and why wait one year for that? Now, if you start making the big bucks, writing "EXEMPT" and owing too much in taxes ($1000 or more but don't quote me on this) might trigger underpayment penalties. Once again, this is situation-dependent, but many college students find it applies to their situation to write exempt.
If you've never filed taxes before, take a look at form 1040EZ:
http://www.irs.gov/pub/irs-pdf/f1040ez.pdf?portlet=3
It's probably what you'll have to file next year. (And heck, in my personal, nonprofessional opinion, even if you don't owe any taxes or don't expect a refund, it's still a good practice IMHO to just file the taxes for your permanent records. It might help make applying for financial aid easier. One additional reason is that there is a 2008 stimulus package based on 2007 income *AS WELL AS* 2008 income, so filing a tax return in 2009 (for your 2008 income) might give you an extra $300 or whatever.)
I've actually never filled out a 1040 form by hand -- always used H&R Block online and had it do all the math for me. There's a ton of places that do free federal e-file, so it's ALL good if your first impression of tax forms seems like a huge PITA. It can be, but it doesn't have to be.
Good luck! Knowledge is power.
😎
Edit: Another "mistake" I did when I was 18, 19, 20 years old was I didn't keep all my paperwork organized. I was smart enough not to throw away my tax forms, but all I did was mix them in with the rest of my "important mail" in huge cardboard boxes (silly freshman!). One thing that greatly helped me was get a small filing chest or cabinet and actually make files for 2006, 2007, 2008, etc. It saved a LOT of headaches.
