|Super Heros and Their Summer Jobs|
Students who are holding their first job during summer vacation may not be familiar with many of the rules regarding taxation of wages. Here are a few pointers for those entering the workforce for the first time:1. If working for an employer, a new hire will need to complete a W-4 form. This form is usually provided by the employer and will ensure that the correct amount of tax is withheld.
2. It’s important to note that all tips received while working are taxable. Furthermore, any tips totaling more than $20 in a given month must be reported to the employer. It is best to keep a daily log of tips received to ensure accuracy in reporting.
3. Even income from odd jobs is taxable. For example, individuals are considered to be self-employed if they are paid for mowing lawns, helping people move or babysitting.
4. It is likely that with a summer job, a student worker may not earn enough to actually owe taxes; however, Social Security and Medicare taxes will still be withheld from their pay.
5. If self-employed, the individual will be required to pay self-employment taxes.
6. For those in ROTC, any active duty pay is taxable but food and lodging allowances are not.
7. Newspaper distributors or deliverers are considered self-employed if the following criteria are met:
a. They are in the business of delivering newspapers
b. Most of their pay is related to sales of papers as opposed to number of hours worked
c. They have a contract with the employer that says they will not be treated as an employee
With those important reminders in mind, have a great summer and enjoy the work experience.