Our experienced accountants and other professionals at Maicher CPA Pllc provide a full range of tax preparation services to help businesses and individuals succeed. Summer jobs are here and students, just like their parents, have certain obligations. Some guidance can help save money and avoid troubles down the road.
Here are some helpful tax tips students should consider:
- Withholding, Estimated Tax and Filing a Tax Return. If you are an employee, your employer withholds tax from your paychecks. If you are self-employed, you may have to pay estimated tax directly to the IRS on set dates during the year. You do not need to file a tax return if your income is less than $12,200.00 but you may still wish to file a return if money is withheld by you employer.
- Self-Employment. Money you earn doing work for others is taxable. Some work you do may count as self-employment. These can be jobs like baby-sitting or lawn care. Keep good records of your income and expenses related to your work. You may be able to deduct (subtract) those costs from your income on your tax return. A deduction can cut taxes.
- Tip Income. All tip income is taxable. Keep a daily log to report them. You must report $20 or more in cash tips in any one month to your employer. And you must report all of your yearly tips on your tax return.
- Payroll Taxes. You may earn too little from your summer job to owe income tax. But your employer usually must withhold social security and Medicare taxes from your pay. If you’re self-employed, you may have to pay them yourself. They count for your coverage under the Social Security system.
- While you might be eligible for the student loan interest deduction, it’s important to know that only the interest (not the entire payment) is deductible up to $2,500. There is some other good news. Tuition waivers are not taxable income though grants for room and board are taxable income.
Conclusion: Even students have certain tax obligations to consider. At Maicher CPA Pllc, our Certified Public Accountants and other tax professionals have provided effective and ethical tax return preparation services for decades to individuals and businesses. Contact us today for an appointment.
“Claiming Your Student Loan Interest Deduction & Other 2019 Student Loan Tax Tips,” MSN Money (March 18, 2019).
“Tax-Filing Tips for College Students,” US News & World Report (October 26, 2018).
IRS Publication – “Tax Tips for Students Working this Summer,” (IRS Special Edition Tax Tip 2016-11, June 28, 2016 – Archive).