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Tips for Students with Summer Jobs
August 28, 2019
Every summer, students turn their attention to get a summer job and make money. However, they won’t get to take the entire amount they have earned. The reason being that their employers are required to deduct withholding taxes from their paycheck. You need to know about this and awareness can help you prevent any problems. Today we are going to discuss some tax tips which you should know if you are thinking about getting a summer job.
Tips for Students with Summer Jobs
New employees. Employers are bound to withhold taxes from the paychecks of their employees even if they are students. Everyone who starts a new job is required to fill out a Form W-4, Employee’s Withholding Allowance Certificate. This form is used by employers for calculating the amount of federal income tax to withhold from the new employee’s pay. You can use the Withholding calculator on the website of the Internal Revenue Service (IRS). It will help you in filling out this form.
Self-employment. You will be considered self-employed if you do odd jobs over the summer for making extra cash. This includes jobs like lawn care and baby-sitting. The money you earn from self-employment is taxable and being a self-employed worker, you are responsible for paying your taxes directly to the Internal Revenue Service (IRS). One way of doing this is that you make estimated tax payments during the year.
Tip income. If you take a job which includes receiving tips like being a waiter or camp counselor then you need to know that the earned tips as part of the summer jobs are taxable. You should maintain a daily log of your received tips hence you will be better able to report the. If the cash tips of any month total of $20 or more than you need to report cash tips to your employer.
Payroll taxes. This tax is dedicated to paying for benefits under the Social Security System. Students usually earn very little from their summer jobs to owe income tax. However, employers are still required to withhold Medicare and Social Security taxes from their pay. If you are self-employed then the Medicare and Social Security taxes will still be due. And you need to pay them directly to the Internal Revenue Service (IRS).
Reserve Officers’ Training Corps (ROTC) pay. If you are in an ROTC program as a student and receive pay for activities then the amount is taxable. The activities usually include summer advanced camp. If you receive additional allowances from your ROTC programs such as for food and lodging then that amount might not be taxable.
Use IRS Free File. You can prepare and e-file your tax return for free using IRS Free File. It is available on the IRS website. 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.
The Takeaway
Ultimately, there is no downside to a summer job. You get work experience and money in your pocket. Take the time to understand these tips and what having a summer job as a student will mean for you.
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Tips for Students with Summer Jobs
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