Don’t be surprised when your employer withholds taxes from your paychecks. That’s how you pay your taxes when you’re an employee. If you’re self employed you may have to pay estimated taxes directly to the IRS on certain dates during the year. This is how a you pay as you go tax system works
New employees need to fill out a W-4 form. An employee’s withholding allowance certificate is used to figure out how much federal income tax to withhold from your pay. The IRS withholding calculator tool on IRS.gov can help you fill out the form.
Remember tip income is taxable. If you get tips, you must keep a daily log as you can report them . You must report $20 or more in cash tips in any one month to your employer. You must report all of your yearly tips on your tax return. A deduction may help lower your tax return.
Money you earn doing work for others is taxable. Some work you do can count as self employment, like babysitting or mowing the lawn. Keep accurate records of expenses related to work. You may be able to deduct those costs from your income on your tax return. A deduction may help lower your taxes.
If you’re in ROTC, your active duty pay, such as pay you get for summer camp, is taxable. A subsistence allowance you get while in advanced training isn’t taxable.
You may not earn enough from a summer job to owe income tax. But your employer usually must withhold social security and medicare taxes from your pay. If you’re self employed you must pay them yourself. They count toward your coverage under the social security system.
If you’re a newspaper carrier or distributor, special rules apply. If you meet certain conditions you’re considered self employed. If you don’t meet those conditions and are under the age of 18 you are usually exempt from social security and medicare taxes.
You may not earn enough money from your summer job to be required to file a tax return. Even if that’s true you may still want to file. For example, if your employer withheld income tax from your pay you’ll have to file a return to get your taxes refunded.
Source: IRS.gov Photo:Pexels
Rhonda A. Mannes,