Teen Summer Jobs | Are You Exempt From Federal Withholding?
Editor’s Note: Finding a summer job is great for many reasons, but sometimes teenagers just don’t know where to begin. Learn more about teen summer jobs — and if they (or you) are you exempt from state and federal withholding.
FOR TEENS ONLY
As you embark on your new work endeavor, be sure to keep these tips in mind:
1. Get to know the W-4.
On your first day of work, your employer may ask you to fill out Form W-4. This form (the Employee’s Withholding Allowance Certificate) is used by employers to determine the amount of tax that will be withheld from your paycheck. Your manager, your parents or an HR representative will be happy to walk you through it, or you can find some more info on Form W-4 here. Juggling more than one summer job? The IRS advises you to “make sure all your employers are withholding an adequate amount of taxes to cover your total income tax liability.”
2. Your tips are taxable.
Did you get a tip for your outstanding service? Surely you did, because you’re awesome. But the IRS wants you to know this: “All tips you receive are taxable income and are therefore subject to federal income tax.”
3. Payment for odd jobs is taxable.
Did you mow the neighbors’ lawn? Babysit the cousins? Set up a family friend’s WiFi network? Get some cash for cleaning the community pool? These are “earnings you receive”– and yes, they’re subject to income tax. Be sure to keep track of the tips you earn. When it comes time file your tax return, you’ll need that information.
4. Stay on top of employment taxes.
Even if you do not earn enough this summer to owe income tax, you’ll probably end up paying employment taxes — generally, your employer will withhold these from your paycheck. But, per the IRS, “if you earn $400 or more from self-employment, you will have to pay self-employment tax. This pays for benefits under the Social Security system that are available for self-employed individuals the same as they are for employees that have taxes withheld from their wages.”
Want to know how much you’ll owe come tax return time? Check out this free tax return calculator & estimator to see how much you’ll owe or if you’ll be getting a tax refund.
Additional questions about taxation of your summer or part-time gig? View the article “Wait a Minute: Do I Need to File a Tax Return?”
FOR PARENTS OF TEENS
Working part-time while in school is a great way for teens to build up future savings. Even if your teen won’t be making enough to cover the kinds of expenses they’ll have in the future, earning money through part-time or summer jobs will still make an impact.
While this job may not cover their college tuition, it can help your teen finance other student-related expenses, such as textbooks, transportation, groceries and dorm furnishings. These are all expenses that can eat up loan money and add to the eventual interest.
When it comes to finding a summer job, have your teen first ask friends and family that may be able to assist them. Maybe it is a friend who works at the local café. Or, perhaps a family member is a doctor or other professional who needs help answering phones at the office. This is an appropriate first step to test the waters and see what is out there within reach.
If their contacts can’t assist with the job search, it’s time for them to move their efforts online. Ask that they gather a list of places they could see themselves working. Perhaps there’s a local restaurant they like, or a nonprofit organization that lines up with their interests. Maybe they’ll want to take advantage of good grades and tutor other students. Regardless, having a list of potential job opportunities is a key first step to jumpstarting the process.
Whatever job opportunity your teen might choose to pursue, they will need a resume, which should outline their academic and, if applicable, professional successes. Be sure they include any academic awards, relevant coursework, leadership opportunities or accolades at student clubs and volunteer opportunities. Highlighting these successes is a lesson in marketing themselves for employers and will help them stand out from the crowd.
Do you need to get a copy of your wage and income transcript from the IRS? Learn more from the tax experts at H&R Block.
Learn how you should report the tips you received on your taxes.
The gig economy and taxes go hand-in-hand. If gig work is your primary form of income, review these important tax tips from our H&R Block tax professionals.