Teens And Taxes- What You Need to Know
Summer Jobs and Taxes
A summer job is a rite of passage for most teenagers. It gives a taste of responsibility, builds character, and most importantly- extra spending money. The lure of making extra money in the summer is quite a draw, but many people, parents and teens alike, do not think of the tax implications that come with a summer job. Most people will not find it legally necessary to file if they only work a few months out of the year. However, filing taxes is the only way to get back the money that was withheld from your paycheck. Also, it pays to remember that filing thresholds for dependents are not the same as an ordinary taxpayer.
Lawn care or babysitting is a fairly typical line of work for teens looking for a low-pressure summer job. Work like this is considered self-employment for tax purposes. Workers that are self-employed pay directly to the IRS based on their income and a good way to ensure you don’t get stuck with a large bill come tax time is to pay estimated taxes throughout the year. When self-employed it is up to you to keep up with all payments received and business expenses accrued. The gas you have put into your lawnmower are write-offs that can earn you money come tax time. Remember, any expenses could be considered write-offs. Keeping up with your receipts and claiming those expenses means you could get that money back.
The service industry is another line of work that pays well for teens looking for spending money. In this industry, the majority of your money will not come directly from their employer, but comes from tips received from customers. Keeping a daily journal of tips you have gotten during the shift is a good way to see if the money you are making is worth the hours put in and it will to give you an accurate account of tips received on your tax forms. By law, the IRS requires workers to report tips if they equal or surpass $20 per month.
A lot of seasonal workers will find that they do not make enough money in their brief employment to hit the mark to owe income tax. If that is the case, the company will still take money out for Social Security and Medicare. You are responsible for the the necessary taxes when self-employed.
The main thing is just being aware of the tax implications that come with a summer job. It is very tempting to rip the check away from your pay-stub and forget about it. But keeping track of all of your job-related paperwork will save you a headache at the end of the year. Once you have your paperwork and W-2s in order it is a simple matter of filing. Here at Gagliano Associates we offer half price taxes for dependents. Schedule your appointment at: https://gaglianoassociates.com/contact/