Today we will talk about summer jobs for high school and college students.
Summer jobs offer students the opportunity to learn about the working world and taxes.
As a new employee, they’ll need to fill out a Form W-4 or Employee’s Withholding Allowance Certificate. Employers use this form to figure how much federal and state income tax to withhold from workers’ paychecks. It is important to complete your W-4 form correctly so the employer withholds the right amount of taxes. In some cases, the employee may be able to claim exempt status from withholding income tax.
If you’ll receive tips as part of your income, remember that all tips you receive are taxable. Keep a daily log to record your tips.
Maybe you’ll earn money doing odd jobs this summer. If so, keep in mind that earnings you receive from self-employment are subject to income tax. Self-employment can include pay you get from jobs like babysitting and lawn mowing. If you are self-employed, be sure to keep track of any related expenses you incur.
You may not earn enough money from your summer job to owe income tax, but you will probably have to pay Social Security and Medicare taxes. Your employer usually must withhold these taxes from your paycheck. Or, if you’re self-employed, you may have to pay self-employment taxes.
Tax Tip Tuesday will be taking a break for a few weeks and will resume on June 25th. However, if we get any new tax laws passed at the federal or Iowa level before then, we will issue a special edition.
Disclaimer: The items included in the Tax Tip Tuesday Video Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advise contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.