Summer is almost here! First job ever? Tax tips for you!

May, 27 2014 by Carol Thompson, EA

First job ever? Very cool! But what do you do about those pesky tax forms they gave you at the job? How do you fill them out? Why are they taking all that money out!? Where does it go? Will you get it back? These are just a few of the questions tax practitioners field each year when the kids of the clients hit the bricks looking for summer work. Here are a few of the answers:

1. Withholding: Yes, your employer withholds Social Security and Medicare. These are not refundable and not optional. Every working person pays into the system.

2. Forms W-4 and W-2. Don’t confuse these forms!

Form W-4, Employee’s Withholding Allowance Certificate: This is the form you fill out when you are hired to tell the employer how much to withhold from each pay period’s check.

Form W-2, Wage and Tax Statement: This form tells the IRS and Social Security how much you earned in wages, and how much, if any, taxes were withheld from your pay.

3. Withholding: If your income is below $6,200 (2014), you may not be liable for any income taxes. This is called the “Standard Deduction.” If you are not considered the dependent of another person, your filing requirement is the Standard Deduction plus your Personal Exemption of $3,950 (2014), and you will not owe tax if your income is less than $10,150 total. If you will earn less than $6,200 ($10,150 if not claimed by anyone else), you may file “Exempt” on Form W-4. For more help with calculating your withholding, follow the instructions on the IRS Withholding Calculator.

4. Oops! Your Employer Withheld Income Taxes! Don’t worry! If your income is less than the filing requirements, you will get back all of your federal and state income tax withholding by filing a return. You can use the IRS Free File system found on the website. Remember, generally, that you will not get a refund of Social Security or Medicare withholdings.

5. Form I-9. Your new employer may also ask you to fill out Form I-9, Employment Eligibility Verification, and present some identification proving who you are. This is a federal requirement under the Bureau of Citizenship and Immigration Services to prove an employee’s eligibility and right to work in the United States.

You can find more information on the IRS website, including the tax treatment of tips, delivering newspapers, mowing lawns, and getting gigs with your band. Have a great summer!