Teen Tax Tips: Starting a Summer Job
Once school's out, many students will start summer jobs—from working at a summer camp to being an office intern. The IRS reminds students that not all the money they earn may make it to their pocket. That's because employers must withhold taxes from the employee's paycheck. Here are a few things these workers need to know when starting a summer job:
- New employees—Students and teenage employees normally have taxes withheld from their paychecks by the employer. When a taxpayer gets a new job, they need to fill out a Form W-4. Employers use this form to calculate how much federal income tax to withhold from the employee's pay. The Withholding Calculator on IRS.gov can help a taxpayer fill out this form: Link opens in a new windowhttps://www.irs.gov/individuals/irs-withholding-calculator.
- Self-employment—Students who do odd jobs over the summer to make extra cash, like babysitting or lawn care, are considered self-employed. They should remember that money earned from self-employment is taxable. Workers who are self-employed may be responsible for paying taxes directly to the IRS. One way to do that is by making estimated tax payments during the year. Taxpayers who do this should keep good records of all money they receive.
- Tip income—Someone working as a waiter or a camp counselor who receives tips as part of their summer income should know that tip income is taxable income and subject to federal income tax. They should keep a daily log to accurately report it, as they will report tips of $20 or more received in cash in any single month.
- Payroll taxes—These taxes pay for benefits under the Social Security system. While taxpayers may earn too little from their summer jobs to owe income tax, employers usually must still withhold Social Security and Medicare taxes from their pay. If a taxpayer is self-employed, then Social Security and Medicare taxes may still be due and are generally paid by the taxpayer.
- Reserve Officers' Training Corps (ROTC) pay—If a taxpayer is in an ROTC program, active duty pay, such as pay for summer advanced camp, is taxable. Other allowances the taxpayer may receive—like food and lodging allowances paid to ROTC students participating in advanced training—may not be taxable. The Armed Forces' Tax Guide on IRS.gov has more details: Link opens in a new windowhttps://www.irs.gov/forms-pubs/about-publication-3.
Internal Revenue Service (IRS). (2018, May 29). Tips for teenage taxpayers starting a summer job (IRS Tax Tip 2018-82). Retrieved January 23, 2019, from https://www.irs.gov/