8 things every student and parent should keep in mind when filing income tax returns
Many students take a job during the summer after the end of the school year. If it is your first job, you have the opportunity to learn about the world of work. That includes the taxes we pay to support where we live, our state and our nation. Here are eight factors that students with summer jobs should know about taxes:
1. Don’t be surprised when your employer withholds taxes from your paychecks. This is how you pay your taxes when you are an employee. If you are a self-employed employee, you may have to pay estimated taxes directly to the IRS on certain dates during the year. This is how our system of paying taxes works as incurred.
2. As a new employee, you will need to fill out a Form W-4 (SP), Employee Withholding Exemption Certificate. Your employer will use it to determine how much to withhold from your federal income tax pay.
3. Please note that all tip income is taxable. If you receive tips you must keep a daily log to declare them. You must report to your employer tips in cash of $ 20 or more in any month.
4. The money you earn working for others is taxable. Certain jobs you do may count as self-employment. This may include jobs such as babysitting and mowing. Keep good records of expenses related to your work. You could deduct (subtract) those costs from the income on your tax return. A deduction could help you reduce your taxes.
5. If you are in ROTC, your pay for active duty, such as salaries received during summer camp, is subject to tax. A food and accommodation grant you receive while participating in advanced training is not taxable.
6. You may not earn enough money from your summer job to owe income taxes. But your employer usually must withhold Social Security and Medicare taxes from your pay. If you are self-employed, you may have to pay them yourself. This counts towards your coverage under the Social Security system.
7. If you are a newspaper dealer or distributor, special rules apply. If you meet certain conditions, you are considered a self-employed employee. If you do not meet those conditions and are under 18, you are generally exempt from Social Security and Medicare taxes.
8. You may not earn enough money from your summer job to be required to file a tax return. Even if this is the case, you may wish to submit a statement.
Visit IRS.gov, for more information on student tax rules.