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5 Tips for Students with Summer Jobs

School is out!!

Road trips, cookouts, camp stays, concerts and beach vacations… ahhh, summer!

While the cool weather is fading and replaced by warm sunshine, students are deciding how to spend their time for the next few months. Many students will get their very first ‘pay check’ job.  The perfect time to practice budgeting, understanding all the taxes on your pay stub, and even retirement savings! 

Here are the five things students who are new to the workforce should know about taxes. Share with your children, neighbors, and friends!

1. As a new employee, you will need to fill out a Form W-4, Employee’s Withholding Allowance Certificate. This will determine how much federal income tax your employer will withhold. The IRS Withholding Calculator tool on IRS.gov can help you fill out the form.

2. All tip income is taxable. If you make tips at a restaurant or any other venue, you must keep a daily log so you can report them. 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.

3. If you’re in ROTC, your active duty pay, from your summer camp, is taxable. The subsistence allowance you get while in advanced training is not taxable.

4. If you’re a newspaper carrier or distributor, special rules apply. If you meet certain conditions, you’re considered self-employed. If you don’t meet those conditions and are under age 18, you are usually exempt from Social Security and Medicare taxes.

5. You may not earn enough money from your summer job to be required to file a tax return. Even if that’s true, you may still want to file. For example, if your employer withheld income tax from your pay, you’ll have to file a return to get the taxes that were withheld refunded back to you.

What was your first ‘pay check’ summer job? What did you learn from the experience?

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