Students often get a job in
the summer. If it’s your first job it gives you a chance to learn about work
and paying tax. The tax you pay supports your home town, your state and our
nation. Here are some tips students should know about summer jobs and taxes:
- Withholding and Estimated Tax. If you are an employee, your employer withholds
tax from your paychecks. If you are self-employed, you may have to
pay estimated tax directly to the IRS on set dates during the
year. This is how our pay-as-you-go tax system works.
- New Employees. When you
get a new job, you will need to fill out a Form W-4, Employee’s
Withholding Allowance Certificate. Employers use it to figure how much
federal income tax to withhold from your pay. The IRS
Withholding Calculator tool on IRS.gov can help you fill out the
form.
- Self-Employment. Money you earn
doing work for others is taxable. Some work you do may count as self-employment.
These can be jobs like baby-sitting or lawn care. Keep good records of
your income and expenses related to your work. You may be able to deduct
(subtract) those costs from your income on your tax return. A
deduction can cut taxes.
- Tip Income. All tip
income is taxable. Keep a daily log to report them. You must report
$20 or more in cash tips in any one month to your employer. And you must
report all of your yearly tips on your tax return.
- Payroll Taxes. You may earn
too little from your summer job to owe income tax. But your employer
usually must withhold social security and Medicare taxes from
your pay. If you’re self-employed, you may have to pay them yourself. They
count for your coverage under the Social Security system.
- Newspaper Carriers. Special
rules apply to a newspaper carrier or distributor. If you meet
certain conditions, you are self-employed. If you do not meet those
conditions, and are under age 18, you may be exempt from social security
and Medicare taxes.
- ROTC Pay. If you’re in
ROTC, active duty pay, such as pay you get for summer camp, is
taxable. A subsistence allowance you get while in advanced training is not
taxable.
- Use IRS Free File. You can
prepare and e-file your tax return for free using IRS Free File. It
is only available on IRS.gov. You may not earn enough money to be required
to file a federal tax return. Even if that is true, you may still want to
file. For example, if your employer withheld income tax from your pay, you
will have to file a return to get a tax refund.
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