With summer around the corner, many students will turn their attention to making money by working a summer job. Whether it’s flipping burgers, waitressing, or filing documents, the IRS wants student workers to know some facts about their summer jobs and taxes.
Not all the money they earn will make it to their pocket because employers must withhold taxes from their paychecks. Here are some tax tips young individuals should know when starting a summer job, according to an IRS press release.
New employees: Employees – including those who are students – normally have taxes withheld from their paychecks by their employer. When anyone gets a new job, they need to fill out a Form W-4, Employee’s Withholding Allowance Certificate. Employers use this form to calculate how much federal income tax to withhold from the new employee’s pay. The Withholding Calculator on IRS.gov can help a taxpayer fill out this form.
Self-employment: Students who do odd jobs over the summer to make extra cash are self-employed. This includes such jobs as baby-sitting or lawn care. Money earned from self-employment is taxable, and self-employed workers may be responsible for paying taxes directly to the IRS. One way they can do this is by making estimated tax payments during the year.
Tip income: Students working as waiters or camp counselors who earn tips as part of their summer income should know tip income is taxable. They should be sure to keep a daily log to accurately report any and all tips. They must report cash tips to their employer for any month that totals $20 or more.
Payroll taxes: This tax pays for benefits under the Social Security system. While students may earn too little from their summer job to owe income tax, employers usually must still withhold Social Security and Medicare taxes from their pay. If a student is self-employed, Social Security and Medicare taxes may still be due and are generally paid by the student.
Reserve Officers’ Training Corps (ROTC) pay: If a student is in an ROTC program, and receives pay for activities such as summer advanced camp, it is taxable. Other allowances the student may receive – like food and lodging – may not be taxable. The Armed Forces’ Tax Guide on IRS.gov provides details.
Do I Have Income Subject to Self-Employment Tax?
If you haven’t found a job for the summer yet you might consider looking at this survey conducted by the website WalletHub.com.
WalletHub took an in-depth look at 2019’s Best Places for Summer Jobs to help job seekers find the best summer employment opportunities.
WalletHub’s analysts compared more than 180 markets in the U.S. across 21 key metrics. The data set ranges from availability of summer jobs to median income of part-time workers to median rental price, it said in a news release.
Here are some of its key findings:
|Top 20 Cities for Summer Jobs|
|1||Orlando, FL||11||Salt Lake City, UT|
|2||Scottsdale, AZ||12||San Francisco, CA|
|3||Denver, CO||13||Charleston, SC|
|4||Dover, DE||14||Boston, MA|
|5||Wilmington, DE||15||Rapid City, SD|
|6||Portland, ME||16||Minneapolis, MN|
|7||Las Vegas, NV||17||Atlanta, GA|
|8||Austin, TX||18||Seattle, WA|
|9||Columbia, MD||19||Tampa, FL|
|10||Fort Lauderdale, FL||20||Richmond, VA|
Best vs. worst
South Burlington, Vermont, has the mostpart-time job openings per 1,000 people aged 16 to 24 in the labor force, 183.97, which is 27.5 times higher than in North Las Vegas, Nevada, the city with the fewest at 6.69.
Scottsdale, Ariz., has the highest median income for part-time workers (adjusted for cost of living), $25,359, which is than 3.6 times higher than in New York, the city with the lowest at $6,986.
Portland, Maine, has the highest labor-force participation rate of people aged 16 to 24, 77.66 percent, which is two times higher than in Irvine, Calif., the city with the lowest at 38.58 percent.
Bismarck, N.D., has the lowest unemployment rate for people aged 16 to 24, 2.69 percent, which is 12.5 times lower than in Detroit, the city with the highest at 33.53 percent.
South Burlington, Vt. has the lowest share of people aged 16 to 24 living in poverty, 7.87 percent, which is 6.8 times lower than in Tallahassee, Florida, the city with the highest at 53.40 percent.
To view the full report and your city’s rank, please visit:
Sources IRS and WalletHub