It is normal for students to find a job during the summer to earn a little money for their expenses and to start having some work experience. But nevertheless, many of them may not know that the IRS will want a slice of that money they earned, so they must be very careful about the taxes they must pay.
The first thing to know is that not all of the money you earn will get into your hands, as your employers will have to withhold a percentage of taxes from your paycheck.
In the case of students who are new employees to a company, what usually happens is that they must complete a Form W-4, Certificate of Employee Withholdings, to give to their boss.
Bosses will use this form to find out how much they should withhold from the new hire’s salary to pay it in federal taxes.
On the other hand, there are students who have a slightly more entrepreneurial spirit and are self-employed. Young people who take care of children or who mow the lawn, for example, are considered here.
The money these young people earn is also taxed, only that, unlike those who are hired by a company, they are responsible for paying them directly to the IRS. They can do this by making estimated tax payments during the year.
Also, there are students who get jobs where they are tipped, and they must remember that they must also pay taxes on them. For this, they have to keep a daily log to accurately report how much money they received in tips.
Youth must report all tips they had in a month totaling $ 20 or more to the employer.
Although there are students who receive a very low salary in their summer jobs, employers still must have income tax withheld to pay for Social Security and Medicare benefits.
Keep in mind that, even if the student is self-employed, he may have to pay Social Security and Medicare taxes, and he will have to do that payment process with the IRS himself.
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