Tax tips for students on the job this summer

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Many students take a summer job, which gives them a chance to learn about the working world.

That includes learning about taxes. Here are eight things that students who take a summer job should know about taxes:

• Don’t be surprised when an employer withholds taxes from paychecks. Those who are self-employed may have to pay estimated taxes directly to the IRS on certain dates during the year.

• New employees need to fill out a Form W-4, which the employer uses to figure how much federal income tax to withhold. The IRS Withholding Calculator tool on www.IRS.gov can help with filling out the form.

• Keep in mind that all tip income is taxable. Those who receive tips must keep a daily log so they can report them. Employees are required to report $20 or more in cash tips in any one month to their employer — and they must report all yearly tips on their tax return.

• Money earned doing work for others is taxable. Some work may count as self-employment, including jobs like babysitting and lawn mowing. Keep good records of expenses related to such work. Those costs may be deducted from income on a tax return. A deduction may help lower taxes.

• For those in ROTC, active-duty pay, such as pay for summer camp, is taxable. A subsistence allowance received while in advanced training isn’t taxable.

• Students working over the summer may not earn enough to owe income tax. But an employer usually must withhold Social Security and Medicare taxes from an employee’s pay. Those who are self-employed may have to pay those taxes themselves. They count toward coverage under the Social Security system.

• Special rules apply for newspaper carriers or distributors. An employee who meets certain conditions is considered self-employed. Those who do not meet those conditions and are younger than age 18 are usually exempt from Social Security and Medicare taxes.

• Students may not earn enough money from your summer job to be required to file a tax return. Even if that’s true, the student may still want to file. For example, if the employer withheld income tax from a student’s pay, the student will have to file a return to get those taxes refunded. Tax returns may be prepared and e-filed for free using IRS Free File, available exclusively on IRS.gov.

Visit IRS.gov for more information.