MOUNTAINSIDE – Many high school and college students may have a summer job. Some students may not realize they have to pay taxes on their summer income. The IRS offers tips for students about income earned while working a summer job.
All employees fill out a W-4, Employee’s Withholding Allowance Certificate, when starting a new job. This form is used by employers to determine the amount of tax that will be withheld from your paycheck. If you have multiple summer jobs you will want to make sure all your employers are withholding an adequate amount of taxes to cover your total income tax. To make sure your withholding is correct; use the automated Withholding Calculator on the IRS.gov website.
If you received a refund of all withheld federal income taxes for 2010 and you expect the same for 2011, you may claim “exempt” on your Form W-4 when you’re hired. That can increase your paycheck and possibly let you avoid having to file a 2011 federal tax return. If you claim exempt status, your employer should withhold Social Security and Medicare taxes from your wages but not federal income tax. The automated Withholding Calculator on the IRS.gov website will help you determine if you are exempt from having federal income taxes withheld.
Whether you are working as a waiter or a camp counselor, you may receive tips as part of your summer income. All tip income you receive is taxable income and is therefore subject to federal income tax.
Many students do odd jobs over the summer to make extra cash. Earnings you received from self-employment are subject to income tax. These earnings include income from odd jobs like baby-sitting and lawn mowing. Estimated tax payments can be made by submitting Form 1040-ES, Estimated Tax for Individuals, along with your payment.
If you have net earnings of $400 or more from self-employment, you will also have to pay self-employment tax. This tax pays for your benefits under the Social Security system. Social Security and Medicare benefits are available to individuals who are self-employed the same as they are to wage earners who have Social Security tax and Medicare tax withheld from their wages. The self-employment tax is figured on Form 1040, Schedule SE.
If you have federal income taxes withheld or made estimated tax payments you will need to file a tax return in order to get a refund you are entitled to receive. You will also need to file a tax return if you meet the filing requirements. When tax season arrives consider electronic filing using the Free File or e-file programs available on the IRS.gov website. Electronic filing is safe, easy, fast and accurate for all filers including first-time filers.
For more information, go the IRS.gov website at www.irs.gov.
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