Summer jobs and taxes

The IRS wants students to know some things about summer jobs!

1. Students must fill out a W-4 when starting a new job. A W-4 is used by employers to determine the income tax that will be withheld from paychecks. Students with multiple summer jobs should make sure all employers are withholding enough taxes to cover the total income tax liability.

2. Tips received are taxable income.

3. Students do odd jobs to make extra cash. Earnings you receive from self-employment are subject to income tax. This includes income from jobs like baby-sitting and lawn mowing!

4. If you have net earnings of $400 or more from self-employment, you have to pay self-employment tax. This tax pays for your benefits under the Social Security system.

5. Subsistence allowances paid to ROTC students participating in advanced training are not taxable. 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.
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 which states that you will not be treated as an employee for federal tax purposes.

7. Generally, newspaper carriers or distributors under age 18 are not subject to self-employment tax.