Pls help resolve a tax situation

[FerrumB5]

Hi Folks,

asking for a colleague from previous work. Situation (let's call him "D"):

"D" finished his PhD in Dec 2015 and started looking for a job in mid 2016. He got a job in January 2017. In 2016 he got zero pay and he was claimed as a dependent in his parents' 2016 tax return.

I heard (somewhere, no links or proofs) that if a person has zero income in the previous year, he/she might be tax exempt for this year? I.e. if he earned $0 in 2016, his taxes in 2017 are waived??

But here're his life events in 2017:
Jan 2017 he started a job. Later that year he got married and they got a child.
Not home owner, no taxable gains/losses or dividends

So, I'm just asking the community if there are any tax exempts for him for 2017? Or just go 1040EZ?
Thanks! 

[Cpa Cat]

I heard (somewhere, no links or proofs) that if a person has zero income in the previous year, he/she might be tax exempt for this year? I.e. if he earned $0 in 2016, his taxes in 2017 are waived??

When I laughed out loud at this, I promise it wasn't mockery.

This is 100% untrue.

I like to try to decipher the puzzle of how this kind of misunderstanding occurs, and I'm guessing it's related to estimated taxes. If you had 0 income the year before, you aren't penalized for not paying estimated taxes. You still need to file a tax return pay your taxes by April 15 if you had income in the current year.

[FerrumB5]

Understood and no hard feelings. As I said - I heard it somewhere hell knows where. OK, truth is - "D" said he read it somewhere, and I was skeptical but just wanted to ask the community

[secondcor521]

Cpa cat is right.

It sounds like someone (quite badly) mangled the language around being exempt from federal income tax withholding.  From https://www.irs.gov/individuals/employees/tax-withholding:

"If you claim exemption from withholding, your employer will not withhold federal income tax from your wages. The exemption applies only to income tax, not to Social Security or Medicare tax.

You can claim exemption from withholding for the current year only if both the following situations apply.

[1.] For the prior year, you had a right to a refund of all federal income tax withheld because you had no tax liability.
[2.] For the current year, you expect a refund of all federal income tax withheld because you expect to have no tax liability."

For D, it sounds like 1 applies but 2 does not.

And the above exemption language only applies to withholding from your paycheck.  It does not apply to actual tax liability.