Remember your first legitimate job, that first paycheck? If you are anything like me, you were probably mystified by the discrepancy between your mental calculations and the actual net amount on the check. Not much can prepare you for that hard reality. For many students, their first tax lessons are learned when they land their first summer job.
The IRS offers six tax tips for students starting summer jobs:
1. Fill out a Form W-4 so your employer will know how much to withhold.
2. All tips are taxable.
3. Money earned from odd jobs are taxable.
4. Pay self-employment tax if earnings are $400 or more.
5. Food and lodging allowances paid to ROTC students participating in advanced training are not taxable, but active duty pay is taxable.
6. Generally newspaper carriers under age 18 are not subject to self-employment tax.