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Tips for Teenagers Taxpayers with Paying Summer Jobs

Getting your first summer job is a rite of passage for many teenagers.  It’s your chance to build your resume, get a taste of independence and most importantly, make your own money.  But don’t be surprised if your hourly wage doesn’t match your take home pay.  Most employers deduct money from your paycheck to pay taxes and there isn’t much you can do about it.  Here are a few things you need to know.

Most new employees must complete a W-4

Before starting a new position, employers typically ask you to complete and submit a Form W-4, Employee’s Withholding Certificate.  This is how they determine how much taxes to withhold from your pay.  Not paying enough during the year may result in you owing money at tax time.  On the other hand, if you overpaid, you’ll get a refund when you file your return.  Keep in mind, getting a refund isn’t as great as people make it out to be because it means you missed your chance to bring home a bigger paycheck throughout the year.

Some workers must make estimated tax payments

Many students do odd jobs like babysitting, mowing lawns, tutoring and washing cars to make quick cash.  In this situation, the IRS considers you to be self-employed. Since taxes aren’t withheld from your pay, you’ll need to make quarterly estimated tax payments to the IRS and possibly your state.  The payments are due April 15th, June 15th, September 15th and January 15th of the following year.

Tip income is taxable

If you wait tables or deliver food, tips are probably a big part of your earnings.  Therefore, it’s important to know that tip income is taxable.  Make sure you keep accurate records of how much you receive each day.  If you earn more than $20 in cash tips for the month, it must be reported to your employer.

Expect to pay Social Security and Medicare taxes

The Federal Insurance Contributions Act (FICA) requires employers to deduct Social Security and Medicare taxes from your pay.  The money is used to fund both programs which help support retirees, the disabled and children.  In case you were wondering, 6.2% of your gross wages goes to Social Security tax and 1.45% of your gross wages goes to Medicare taxes.  Your employer must also match these percentages.

Tax filing requirements for students

If you’re still being claimed as a dependent on your parent’s tax return, chances are you won’t be required to file.  However, you may want to file anyway, so you can get back the federal taxes that were withheld from your pay.  For tax year 2021, most single dependents under age 65 and not blind, must file a return if:

  1. Your unearned income was more than $1,100
  2. Your earned income was more than $12,550
  3. Your gross income was more than the larger of
    • $1,100, or
    • Your earned income (up to $12,200) plus $350

For more information about the tax rules for students, visit, or consult with your tax advisor.

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