Guidance on Tax Withholding, Tip Income Reporting & More

Students and teenagers often get summer jobs to earn extra spending money or to save for later. The IRS offers a few tax tips for taxpayers with a summer job:

1. Withholding and Estimated Tax: Student and teenage employees normally have taxes withheld from their paychecks by their employers. But some workers are considered self-employed and may be responsible for paying taxes directly to the IRS. One way to do that is by making estimated tax payments during the year.
2. New Employees: When people get new jobs, they need to fill out a Form W-4, the Employee's Withholding Allowance Certificate. Employers use this form to calculate how much federal income tax to withhold from the employee's pay. The IRS Withholding Calculator Tool on IRS.gov can help a taxpayer fill out the form.
3. Self-Employment: Some types of work--like babysitting and lawn care--are considered self-employment, which is taxable. Keep good records on money received and expenses paid related to the work, because IRS rules may allow some, if not all, costs associated with self-employment to be deducted, reducing the taxes you pay.
4. Tip Income: Employees should report tip income. Keep a daily log to accurately report tips. Report tips of or more received in cash in any single month to the employer.
5. Payroll Taxes: Taxpayers may earn too little from their summer job to owe income tax. Employers usually must withhold Social Security and Medicare taxes from their pay. If a taxpayer is self-employed, then Social Security and Medicare taxes may still be due and are generally paid by the taxpayer, in a timely manner.

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