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Summer job? Congratulations and a reminder about some new responsibilities
June 01, 2018
If you have your first-ever summer job this year, you've achieved a significant milestone.
Seeking out a job and receiving payment for your work is a sign you have the motivation and skill needed to succeed in life. It's also a sign that you are transitioning into adulthood and along with that comes other responsibilities - like paying taxes.
Whether the job is mowing yards for your neighbors or working in a local retail store or restaurant, you will need to consider the tax obligations.
If you work at a store, restaurant, or other business and receive wages, your employer will ask you to complete a Form W-4. Employers use this form to determine how much income tax to withhold from your wages. If you aren't sure how to fill out the form, the Internal Revenue Service (IRS - the federal agency in charge of collecting taxes) has a withholding calculator on its website.
If you are self-employed - that is work a variety of jobs to earn cash, such as lawn mowing or babysitting - you will also need to pay taxes. Money earned from self-employment is taxable. If you earn more than $400 from self-employment, you will need to file a tax return. The IRS has more information online to help you estimate your self-employment tax.
Although paying taxes isn't necessarily a fun part of having your first job, just remember, it is a sign that you have become a responsible adult and are helping contribute to the good of society.