Summer is a great time to make a little extra cash if you’re a student for the rest of the year. It might be coming to an end along with your extra cash flow sadly enough, but here are a few tax tips in regards to that income you’ve been raking in the past few months.
Even if you’re considered a dependent on someone else’s tax return, you will need to file if your income is more than the standard deduction of $6,350 for singles ($400 for self-employed) or unearned income was more than $1,100. File even if you don’t have to because you might be able to get your withholdings back! Read more about this on IRS.gov.
Anyone who has a job, or multiple jobs for that matter, should fill out a Form W-4 for each employer so they know how much income tax to withhold from your check. To know how much is supposed to be being withheld, use the IRS withholding calculator. Any tips collected are also considered taxable, and should be included in your total income.
Self Employed Tax
For those who are self-employed doing random jobs here and there like babysitting and lawn services, these are also reportable as self-employment or independent contracting using form Schedule C (1040). These must be reported if net income is $400 or more, and pays for social security and medicare (withheld portion of an employee’s wages). Keep in mind you may take deductions for any business expenses incurred like travel costs, supplies, etc.
Students in ROTC
If you participate in advanced training and receive an allowance, this is not taxable, but active duty pay (including advanced camp) is.
If your job includes not cash, but a trade (like babysitting for food or an activity), technically the fair market value (FMV) should be reported as income.
If you’re a student, or you have a student that works and you’d like to keep taxes in order and as little as possible, consult a tax professional at D&M Accounting. We’ll work to build a tax plan that works for you and make sure you enjoy as many deductions as possible.