This article was last edited on August 3, 2018. For updated information on summer job taxes, read more here.
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.
Q: Do taxes come out of my paycheck?
A: 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
Q: How much should I be paying in taxes?
A: That depends. You may recall filling out a W-4 withholding form when you started your new job. The information you provided told your employer how much they needed to withhold from your paycheck each pay period for taxes. If you are unsure about how much should be withheld from your paycheck, the IRS Withholding Calculator tool on IRS.gov can help you fill out the W-4 form correctly.
You may not earn enough from your summer job to owe income tax. But your employer usually must withhold Social Security and Medicare taxes from your pay, regardless.
Q: Should I pay taxes on tips?
A: 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.
Q: Do I owe taxes for odd jobs like babysitting, lawn mowing, etc.?
A: Any money you earn doing work for others is taxable. Some work you do may count as self-employment. Keep good records of expenses related to your work. You may be able to deduct (subtract) those costs from your income on your tax return. A deduction may help lower your taxes.
Q: I only worked for 3 months. Do I have to file taxes?
A: You may not earn enough money from your summer job to be required to file a tax return. Even if that’s true, you might still want to file. For example, if your employer withheld income tax from your pay, you’ll have to file a return to get your taxes refunded.
(Post updated 7/20/2018)