CORONAVIRUS UPDATE

Tips for Teenage Taxpayers with Summer Jobs

Students and teenagers often get summer jobs to earn extra spending money or to save for later. The IRS offers a few tax tips for taxpayers with a summer job:

  • Withholding and Estimated Tax.
  • Students and teenage employees normally have taxes withheld from their paychecks by the employer. Some workers are considered self-employed and may be responsible for paying taxes directly to the IRS. One way to do that is by making estimated tax payments during the year.

  • New Employees.
  • When a person gets a new job, they need to fill out a Form W-4, Employee’s Withholding Allowance Certificate. Employers use this form to calculate how much federal income tax to withhold from the employee’s pay.

  • Self-Employment.
  • A taxpayer may engage in types of work that may be considered self-employment. Money earned from self-employment is taxable. Self-employment work can be jobs like baby-sitting or lawn care. Keep good records on money received and expenses paid related to the work. IRS rules may allow some, if not all, costs associated with self-employment to be deducted. A tax deduction generally reduces the taxes you pay.

  • Tip Income.
  • Employees should report tip income. Keep a daily log to accurately report tips. Report tips of $20 or more received in cash in any single month to the employer.

  • Payroll Taxes.
  • Taxpayers may earn too little from their summer job to owe income tax. Employers usually must 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, in a timely manner.

  • Newspaper Carriers.
  • Special rules apply to a newspaper carrier or distributor. If a person meets certain conditions, then they are self-employed. If the taxpayer does not meet those conditions, and are under age 18, they may be exempt from Social Security and Medicare taxes.

  • ROTC Pay.
  • If a taxpayer is in a ROTC program, active duty pay, such as pay for summer advanced camp, is taxable. Other allowances the taxpayer may receive may not be taxable.

  • Use IRS Free File.
  • Taxpayers can prepare and e-file their federal income tax return for free using IRS Free File. Free File is available only on IRS.gov. Some taxpayers may not earn enough money to have to file a federal tax return, by law, but may want to if taxes were withheld. For example, a taxpayer may want to file a tax return because they would be eligible for a tax refund or a refundable credit. IRS Free File can help with these issues.

The professionals in our office can answer the questions you may have about part-time jobs from a tax perspective; call us today.

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