Each summer the IRS offers tax tips for students with summer jobs. As millions of students work this summer and save for fall tuition payments, there are seven helpful IRS guidelines.
1. Withholding - Your employer will withhold funds to pay state and local taxes, payroll taxes and other items from each paycheck.
2. Withholding Allowance - You will need to fill out IRS Form W-4, Employee's Withholding Allowance Certificate. Your employer will use this form to calculate your withholding amounts. You also may want to go to www.irs.gov and use the "IRS Withholding Calculator." This will help you decide how to fill out Form W-4.
3. Self-Employment - If you are self-employed in lawn care, child care or another business activity, you should keep accurate records. Your expenses may be deductible.
4. Tip Income - All of your tip income is taxable. You should keep a daily log. If you receive over $20 in tips per month, you must report that to your employer.
5. Payroll Taxes - You may not have sufficient income to owe federal income tax, but your employer will still usually withhold tax for Social Security and Medicare.
6. Newspaper Carriers - There are special rules if you have a newspaper route. In some cases, you are considered self-employed and must maintain your own income and expense records.
7. Military Cadet Duty - If you attend ROTC summer advanced camp, your active duty pay is taxable. Some allowances may not be taxable. You may want to check out IRS Publication 3 for further information.
Students who are seeking more information may go to www.irs.gov and search for "Tax Rules for Students."