Getting a job in the summer months is a great way for teens and students to earn extra income. If this is your first job, it might also be the first time you’ve ever had to pay taxes. In that case, you probably have a lot of questions about how it all works.
Here is a list of FAQ’s and helpful hints about paying taxes on your summertime income.
Do taxes come out of my paycheck?
Most likely, yes. As you earn income, you are required to pay tax on it. This is referred to as the pay-as-you-go tax system. There are three types of tax that could be coming out of your paycheck.
- Social Security and Medicare Tax (FICA)
- Federal Income Tax
- State Income Tax
Learn more about how FICA and income tax affect your take-home pay.
How much should I be paying in taxes?
That depends. You probably filled out a W-4 withholding form when you started your new job. The information you provided in that form told your employer how much they needed to withhold from your paycheck each pay period for taxes.
You might not earn enough from your summer job to owe income tax. But, your employer is probably required withhold Social Security and Medicare taxes from your paycheck, no matter what.
Tip: If you are unsure about how much should be withheld from your paycheck, the IRS Withholding Calculator tool can help you fill out the W-4 form correctly.
Should I pay taxes on tips?
Yes. All tip income is taxable. If you get tips, keep a daily log of how much you are earning. You must report $20 or more in cash tips in any one month to your employer. And you must report all of your yearly tips on your tax return. Learn more about reporting tips on your taxes.
Do I owe taxes for small jobs like babysitting, lawn mowing, etc.?
Any money you earn doing work for others is taxable. If you earn more than $400 in the year, those jobs could count as a small business (or self-employment).
Tip: keep good records of expenses related to your work. You may be able to deduct those costs from your income on your tax return (a deduction helps lower your tax bill and could result in a bigger tax refund).
How do you know if the IRS thinks you’re self-employed? Read this article to find out if your side jobs are considered a business or a hobby.
I only worked for 3 months. Do I have to file taxes?
You may not earn enough money from your summer job to be required to file a tax return. Even so, you might still want to file. If your employer withheld income tax from your paycheck, you’ll have to file a return to get your tax refund.
People with simple tax situations (like when you are single, you don’t have children, and you have a W-2 tax form) can file a tax return for free with TaxSlayer. Find out more.
Filing your taxes for the first time? Get answers to more frequently asked tax questions here.
This article was last edited on August 18, 2021.