Many high school and college students spend their summers toiling away at restaurants, grocery stores and outdoor positions. But what many may not realize is that their summer job may have tax implications during filing season.
There are a few things young adults should look for when applying for a summer job to help them determine how they will be impacted at tax time. First, some teens may think they are employees, when really they have been hired as independent contractors. Making this distinction early on is important, because independent contractors do not have payroll or income taxes withheld, meaning they are likely to pay taxes on their compensation, MarketWatch reports.
Young adults who determine they are considered employees by their place of business should also pay close attention to their W-4 form, the news source advises. If the worker will not earn enough to incur income taxes, he or she can file a W-4 form to claim an exemption for withhholdng, MarketWatch explains.
Taxes can be a confusing concept for many young adults, and speaking to a tax preparer
may help workers educate themselves on the rules and avoid making costly errors.
Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.