It’s great that you are getting a summer job! But when you’re anticipating getting that first paycheck you might be wondering to yourself “do I have to pay taxes at a summer job?” Even a part-timer like you is expected to pay the US Government their due. Yes, life is not always as Financially Simple as we would like. Here is some helpful info to help you deal with taxes at your summer job:
If you are an employee, your employer normally withholds tax from your paychecks. If you are self-employed, you may be responsible for paying taxes directly to the IRS. One way to do that is by making estimated tax payments on set dates during the year. This is essentially how our pay-as-you-go tax system works.
When you get a new job, you 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 your pay. The IRS Withholding Calculator tool on IRS.gov can help you fill out the form.
The money you earn working for others is taxable. Some work you do may count as self-employment. These can be jobs like babysitting or lawn care. Keep good records of your income and expenses related to your work. You may be able to deduct those costs. A tax deduction generally reduces the taxes you pay.
All tip income is taxable. Keep a daily log to report your tips. You must report $20 or more in cash tips received in any single month to your employer. And you must report all of your yearly tips on your tax return.
Special rules apply to a newspaper carrier or distributor. Certain conditions make you self-employed. If you do not meet those conditions and are under age 18, you may be exempt from Social Security and Medicare taxes.
With the rise in popularity of ridesharing, many people are now turning to companies like Uber and Lyft to earn a supplemental income or for an easy summer job. However, it is important to remember that you are a contractor, and not an employee when working for these types of companies. As such, you are responsible for paying your own taxes, including a self-employment tax. Document all mileage while working and keep receipts for fuel, oil changes, and car insurance, as these can be used to lower your tax bill. In some cases, you can even deduct the interest on your vehicle loan based on the percentage of the car’s business use.
You may earn too little from your summer job to owe income tax. But your employer usually must withhold Social Security and Medicare taxes from your pay. If you’re self-employed, you may have to pay them yourself. They count for your coverage under the Social Security system.
You can prepare and e-file your tax return for free using IRS Free File, available only on IRS.gov. 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.