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A guide to part-time job tax withholding

3 min read

3 min read

September 30, 2019

H&R Block

Working a part-time job to stay busy and make money isn’t meant to be as intense as landing a full-time, long-term job. But, the tax planning that goes into short-term and part-time jobs can actually be more complicated. That’s because the more jobs someone has during the year, the more likely they are to have the wrong amount of taxes taken out of their paychecks. This could mean a big tax refund (which maybe could have helped pay for expenses during the year if left in their paychecks) or a painful tax bill (which could have been minimized if spread out over their paychecks). Either way, taxes and surprises don’t really go well together.

Tax complications for second jobs, part time jobs, low earners and entrepreneurs

To avoid tax surprises, workers should carefully fill out their W-4; the W-4 gives employers all the information they need to withhold the right amount of tax from their paychecks. Workers have to fill out a W-4 when they start a job, but they can change it at any time they want.

“The W-4 can be pretty simple, but the devil’s in the details, or more precisely, the worksheet you should fill out,” said Jackie Perlman, principal tax research analyst at The Tax Institute at H&R Block. “Especially if you have multiple jobs, you need to think about the big picture.”

For example, a teacher who tutors part-time over the summer might make a fraction of his annual income from his tutoring job. But if the teacher doesn’t complete the multiple jobs worksheet on his W-4, the tutoring company doesn’t take into account the teacher’s primary job. For example, the standard withholding on $10,000 of income will be different from the standard withholding on $60,000 combined income. The teacher will probably need more withholding or to request an additional amount of withholding from his employer.

A different concern about inaccurate paycheck withholding affects kids whose only income is earned during the summer, but the same solution holds true. If their wages are low enough over a full year, they can fill out the W-4 to forego withholding entirely. If they did not have a tax liability in the previous year and do not expect to have a tax liability this year, they are exempt from withholding requirements. This could prevent them from needing to file a tax return at all to claim a refund of what they overpaid throughout the year.

“Preparing a tax return is a good opportunity to review your overall financial picture and make plans for the year ahead. But if you’re a kid without a requirement to file a tax return or pay taxes, you don’t want to be in a situation where you have to wait until tax season to get a refund of your money,” said Perlman.

For kids who are babysitting, lawn mowing, pet sitting or doing something else to make money on their own, there’s no W-4 to fill out. They’re the business owners with the responsibility to make quarterly estimated tax payments to the IRS if they have an income tax or self-employment tax liability.

W-4 tax form help available with free online tools, tax pro appointments

Perlman recommends anyone starting a part-time or temporary job, or anyone looking to update their W-4 with an existing employer, visit a tax professional to talk about their specific situation.

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