Tax Tips for Students with a Summer Job

Is your child a student with a summer job? Here’s what you should know about the income your child earns over the summer.

1. Everyone fills out a Form W-4, Employee’s Withholding Allowance Certificate, when starting a new job. This form is used by employers to determine the amount of tax that will be withheld from your paycheck. Taxpayers with multiple summer jobs will want to make sure all their employers are withholding an adequate amount of taxes to cover their total income tax liability. If you have any questions about whether your child’s withholding is correct, please call our office.
2. Whether your child is working as a waiter or a camp counselor, he or she may receive tips as part of his or her summer income. Your child should keep a daily log recording tips received and report thos tips to his or her employer in any month in which they are $20 or more.
3. Many students do odd jobs over the summer to make extra cash. If this is your child’s situation, keep in mind that earnings received from self-employment are also subject to income tax. This includes income from odd jobs such as babysitting and lawn mowing.
4. If your child has net earnings of $400 or more from self-employment or church employee income of $108.28, he or she also has to pay self-employment tax. This tax pays for benefits under the Social Security system. The self-employment tax is figured on Schedule SE (Form 1040), Self-Employment Tax.
5. Subsistence allowances paid to ROTC students participating in advanced training are not taxable. However, active duty pay–such as pay received during summer camp–is taxable.
6. Special rules apply to services performed as a newspaper carrier or distributor. As direct seller, your child is treated as being self-employed for federal tax purposes if the following conditions are met:
   • Your child is in the business of delivering newspapers.
   • All pay for these services directly relates to sales rather than to the number of hours worked.
   • Delivery services are performed under a written contract which states that your child will not be treated as an employee for federal tax purposes.
7. Generally, newspaper carriers or distributors who are under age 18 and are treated as employees (not meeting the conditions described above) are not subject to Social Security and Medicare taxes.

A summer work schedule is sometimes a patchwork of odd jobs, which makes for confusion come tax time. Contact our office if you have any questions about your child’s summer earnings.