Tax Tips for Students With a Summer Job

Reading Time: 2 minutes

Getting your first summer job is a rite of passage for many teenagers. It’s your chance to build your resume, get a taste of independence and most importantly, make your own money. But don’t be surprised if your hourly wage doesn’t match your take home pay. Most employers deduct money from your paycheck to pay taxes and there isn’t much you can do about it. Here are a few tax tips for students with a summer job.

Most new employees must complete a W-4

Before starting a new position, employers typically ask you to complete and submit a Form W-4, Employee’s Withholding Certificate. This is how they determine how much taxes to withhold from your pay. Not paying enough during the year may result in you owing money at tax time. On the other hand, if you overpaid, you’ll get a refund when you file your return. Keep in mind, getting a refund isn’t as great as people make it out to be because it means you missed your chance to bring home a bigger paycheck throughout the year.

Some workers must make estimated tax payments

Many students do odd jobs like babysitting, mowing lawns, tutoring and washing cars to make quick cash. In this situation, the IRS considers you to be self-employed. Since taxes aren’t withheld from your pay, you’ll need to make quarterly estimated tax payments to the IRS and possibly your state. The payments are due April 15^th, June 15^th, September 15^th and January 15^th of the following year.

Tip income is taxable

If you wait tables or deliver food, tips are probably a big part of your earnings. Therefore, it’s important to know that tip income is taxable. Make sure you keep accurate records of how much you receive each day. If you earn more than $20 in cash tips for the month, it must be reported to your employer.

The Federal Insurance Contributions Act (FICA) requires employers to deduct Social Security and Medicare taxes from your pay. The money is used to fund both programs which help support retirees, people with disabilities and children. In case you were wondering, 6.2% of your gross wages goes to Social Security tax and 1.45% of your gross wages goes to Medicare taxes. Your employer must also match these percentages.

Tax filing requirements for students

If you’re still being claimed as a dependent on your parent’s tax return, chances are you won’t be required to file. However, you may want to file anyway, so you can get back the federal taxes that were withheld from your pay. For tax year 2021, most single dependents under age 65 and not blind, must file a return if:

Your unearned income was more than $1,100
Your earned income was more than $12,550
Your gross income was more than the larger of
- $1,100, or
- Your earned income (up to $12,200) plus $350

ezTaxReturn.com is a great way for first-time filers to do their taxes. It’s fast and easy because we do all the hard work. We help you claim the appropriate tax breaks, complete the necessary forms and handle the math. Qualifying taxpayers can even file a FREE federal return.