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How to navigate summer taxes for working students
Labor » IRS offers advice, information to young workers.
First Published Jun 21 2013 08:52 am • Last Updated Dec 07 2013 11:34 pm

Even though summer vacation has just begun, the Internal Revenue Service is reminding young workers that it’s never too early to think about the taxes they will owe from their summer jobs.

If students or others are working only for the summer, they may not earn enough money to owe income tax, but they will probably have to pay Social Security and Medicare taxes, according to IRS spokesman Bill Brunson .

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To begin with, new employees must fill out a Form W-4, which allows employers to calculate how much to withhold from their paychecks. There is an IRS Withholding Calculator tool at IRS.gov to help employees figure out how much should be withheld.

• Employees who earn tips as part of their income should keep in mind that the extra money is taxable. It is recommended that they keep a daily log of tips. If one month’s cash tips are $20 or more, employees must report that to their employer.

• Students who baby-sit or mow lawns to earn money during the summer are considered self-employed, meaning income from these odd-jobs is subject to income tax.

• For those in ROTC, active duty pay is taxable. Food and lodging allowances from advanced training are not taxable.

• Special rules apply to those with newspaper routes. Despite the employee’s age, he or she is treated as being self-employed for federal tax purposes. This also applies if the employee is paid based on sales, not the number of hours worked, or if there is a written contract stating that the employe will not treat the student as an employee for federal tax purposes.

For more information, visit IRS.gov.


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