If you just landed a summer job for the first time, congratulations are in order. Your first job is critical in teaching you many things, one of them being how to pay it back to Uncle Sam.
Your first j-o-b “gives you a chance to learn about the working world,” according to Dan Boone, an IRS media-relations specialist. “That includes taxes we pay to support the place where we live, our state and our nation.”
Keep reading to learn more about what the Internal Revenue Service (IRS) wants new employees to know about taxes.
1.One of the first things you will do as a new employee is fill out an Employee’s Withholding Allowance, or a W-4 form. Your boss will use your W-4 to determine how much federal income tax to withhold from your pay.
2.Remember that every penny you make is taxable. If you make tips at your job, you must keep a daily leger of how much you make, and you are responsible for reporting those tips on your annual tax return.
“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,” wrote Wayne Smith of the Times Daily.
3.Money you earn doing work for anyone is considered taxable income. Jobs like yard maintenance and being a nanny are a form of self-employment. Make sure to keep a record of your work expenses. If you do, you may be able to maximize your tax deductions at the end of the tax year. Deductions help reduce the amount you owe in taxes.
“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,” wrote Smith.
4.Some summer workers will not earn enough money from their jobs to owe income taxes. Regardless of this, your employer is required to withhold Social Security and Medicare taxes from each paycheck.
5.Even if you do not earn enough money to pay income taxes, you are still accountable when it comes to filing your taxes. Typically, if this is the case you may be eligible for a refund.