The summer is a great time to pursue a job if you’re a student. You have more free time, you gain responsibility, and learn about the real working world. This also means you’ll have to pay taxes, just like every other employee. These taxes support local communities, state, and federal governments. Students who chose to work during the summer should know the basics of taxes.
Taxes will be withheld from your paycheck by your employer. It’s the simplest way to pay your taxes. People who are self-employed generally pay an estimated tax amount to the IRS on specially designated payment dates. The tax system our government operates o is considered “pay as you go”.
New employees to a job will be required to fill out a Form W-4, Employee’s Withholding Allowance Certificate. This form helps your employer determine how much tax to deduct from your pay.
If you earn tips, you should know that it is still subject to tax. You should keep a daily log of all of your tips, so you can report them as necessary. Your employer should be notified if you receive more than $20 a month in taxes, and you’ll have to report all of your tips on your yearly tax return.
Jobs like lawn services and babysitting may be considered self-employment. Any income you earn from these jobs is taxable, and you will be responsible for paying. You should keep all receipts and proof of expenses that you pay in relation to your work, as you may be able to deduct some on your income tax return. Deductions can help lower the amount of tax you have to pay.
There’s a possibility you may not earn enough money to have to pay income tax. If that’s the case, you will still have to pay Social Security and Medicare taxes. These will help keep you covered later under the Social Security System. If you are self-employed, you’ll have to pay both taxes on your own.
Newspaper carriers have special tax regulations. Under certain conditions, you can be classified as self-employed. Those who don’t meet the classification and are less than 18 years old, usually don’t have to pay Social Security or Medicare taxes.
Depending on the amount you earn from your summer job, you may not have to file a yearly tax return. Yet it still may be in your best interest to file, as it’s the only way you’ll get a refund if you over-paid income tax.
