Summer Job Tax Facts
May 29, 2024
Summer is a great time to pick up some extra shifts or start a new job. Students or teachers on summer break often want to bring in income during their time off. Be sure to keep in mind income you bring in during the summer may be taxable.
When you think of taxes, you might assume they only apply to full-time, year-round careers. But just because income is earned during the summer months doesn’t mean you won’t owe taxes on it. Here’s what you should know about taxes and summer jobs.
Taxes Will Come Out of Your Paycheck
Some are surprised to learn that not every penny you make will end up in your wallet. Employers are required to withhold taxes from your paychecks. If you are starting a new job, you will need to fill out a Form W-4, known as the Employee’s Withholding Certificate. Your employer uses this paperwork to determine how much federal income tax should come out of your paycheck.
If you need assistance or have questions about filling out Form W-4, be sure to ask your employer or visit the Tax Withholding Estimator.
Money From Self-Employment Is Still Taxable
Not everyone will end up working jobs under an employer. Those with self-employment jobs like lawn care, babysitting, freelancing, or independent contracting work are still required to report any earned income.
One benefit of self-employment is deducting expenses from your taxes. Things like tools, materials, home office supplies, and vehicle mileage may be deducted. Maintain a record of these types of expenses and report them when it comes time to do your taxes.
Note that you could be responsible for paying quarterly estimated tax payments if you’re self-employed. Visit our blog post for more on estimated taxes.
Tips are Taxable
Many summer jobs, like waiting tables, will allow you to earn tips. Be aware that tips earned during your shift are also taxable. In fact, tips of more than $20 within a month must be reported to your employer. This includes tips handed to you from a customer, tips added on a credit card receipt, or tips that were split among you and other employees.
If you receive tips as part of your job, make sure you are maintaining a daily record. This makes it easier when it comes time to report it to your employer and report it on your income tax return.
If you have questions about taxes related to your summer job, don’t hesitate to schedule an appointment with us to discuss your needs.
