Your high school or college kid has a strong chance of landing a summer job since work possibilities for teenagers are projected to be abundant this summer, with greater pay and more prospects. As a result, the likelihood of their having a job increases. The following is some information concerning summer employment and taxes that they should be aware of:

Form W-4

Form W-4, the Employee’s Withholding Allowance Certificate, is a document that has to be filled out whenever someone begins new employment. This is the form that employers use to figure out how much federal income tax should be withheld from the paychecks of new employees. Taxpayers may get assistance filling out this form by using the Withholding Calculator on the website.

Wages Even though some students may not have enough income from their summer jobs to be subject to federal income tax, their employers are nonetheless required to deduct social security and Medicare taxes from their paychecks. If they submit a federal and state tax return the following spring, they will, in most cases, be eligible to get that sum of money back in the form of a refund.

Income from Tips

If your kid is employed in the service sector, tips are likely an important component of their pay; throughout the summer, they may earn tips in addition to other compensation for their labor. Students need to be aware of the tax responsibilities that come along with receiving tips as income since tips are considered taxable income and are consequently subject to federal income tax. Here are some things to keep in mind to ensure that students do not face a tax bill that is unexpected:

Any tips you make must be reported and taxed as income on your federal tax return. The value of non-monetary tips, such as tickets, passes, or other objects of value, is likewise liable to income tax as if they were cash tips.

On your annual tax return, you are required to report the total amount of tips you received throughout the year. This includes tips received directly from customers, tips added to credit, debit, or gift cards, and your share of tips received as part of a tip-splitting arrangement with other employees.

If you get a total of twenty dollars or more in tips from single employment in a single month, you are required to disclose all of your tips for that month to your employer. Your tips should only be included in the report if they are cash, checks, debit cards, or credit cards. Your employer is required to deduct federal income taxes, as well as Social Security and Medicare taxes, from the tips that are reported. Your employer should not be informed of the value of any gratuities that are not cash.

You need to make a record of each day’s tips. Documenting a daily record of tip revenue may be accomplished in a number of ways, one of which is by using the forms that can be found in IRS Publication 1244, Employee’s Daily Record of Tips and Report to Employer: Form 4070-A, Employee’s Daily Record of Tips.

Form 4070, Employee’s Report of Tips to Employer, is the form that workers use to record tips received to their employers. This form may be used to report cash tips, tips received from other employees, gratuities received by debit or credit card, and other types of tips.

Earnings from a Variety of Jobs

In order to supplement their income over the summer months, a lot of college students work odd jobs like babysitting or mowing lawns. If this is the circumstance in which your kid finds themselves, it is important to remember that earnings are counted as income from self-employment. Taxes on Social Security and Medicare may still be owed by a student who is self-employed; however, the student is often responsible for paying these taxes.

Tax on Independent Business Income

Your kid is obligated to pay self-employment tax if the net profits from their business are more than $400 and if they have more than one source of income. Anyone who has a church employee income of at least $108.28 must also pay taxes on their earnings as a self-employed person. The benefits provided by the Social Security system are funded in part by this tax. Individuals who are self-employed are eligible for Social Security and Medicare benefits, just like wage workers who have Social Security tax and Medicare tax taken from their pay. However, the amount of benefits that a self-employed person may get is limited.

Pay for Members of the Reserve Officers’ Training Corps (ROTC)

In most cases, the subsistence allowance that your kid gets while participating in advanced training as an ROTC student and receiving payment for food and accommodation is exempt from taxation. However, taxable income includes things like compensation for active duty as well as money for things like summer advanced camps.


Do not be reluctant to give us a call if you have any inquiries about the amount of money a student earned throughout the summer.


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Tetyana Ser-Manukyan | Glendale Location Manager

Tetyana is a 2nd generation accountant and the Founder of Integrity Accounting Solutions, Inc. She is a meticulously organized and detail-oriented professional with over 23 years of experience in accounting industry.

Long Beach

Marilyn Motsenbocker | Long Beach Location Manager

With more than 35 years of experience in accounting and finance, her managerial expertise and knowledge add value to our firm and complement the well-being of our customers.

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