Tax Tips For Your Kids With Jobs

Many young people have summer jobs or will be going off to college soon and getting jobs to help foot the bill. Here are six tips from the IRS about employment that you may want to share with your children who are working.

  1. When you first start a new job, you must fill out a Form W-4, Employee's Withholding Allowance Certificate. This form is used by employers to determine the amount of tax that will be withheld from your paycheck. If you have multiple jobs, make sure all your employers are withholding an adequate amount of taxes to cover your total income tax liability. To make sure your withholding is correct, use the Withholding Calculator at www.irs.gov.
  2. Whether you are working as a waiter or a camp counselor, you may receive tips as part of your income. All tips you receive are subject to federal income tax.
  3. Many students do odd jobs to make extra cash. Earnings you receive from self-employment – including jobs like babysitting and lawn mowing – are subject to income tax.
  4. If you have net earnings of $400 or more from self-employment, you will also have to pay self-employment tax. This tax pays for your benefits under the Social Security system.
  5. Food and lodging allowances paid to ROTC students participating in advanced training are not taxable. However, active duty pay – such as pay received during summer advanced camp – is taxable.
  6. Special rules apply to services you perform as a newspaper carrier or distributor. You are a direct seller and treated as self-employed for federal tax purposes if you meet the following conditions:
    • You are in the business of delivering newspapers.
    • All your pay for these services directly relates to sales rather than to the number of hours worked.
    • You perform the delivery services under a written contract that states you will not be treated as an employee for federal tax purposes.
 
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