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Tax tips for students with summer jobs

Posted by Andrew Chan  June 11, 2010 03:30 PM

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As the school year comes to an end, many students are turning to summer jobs as a way to help earn income during their summer break from school. Here are some tax tips for those with summer jobs:

1) Be sure to complete a new Form W-4 when you start a new job. The form helps your employer determine how much tax should be withheld from your paycheck. It can also be used to claim complete exemption from withholding any taxes. Form W-4’s that were filled out for 2009 have expired so you will need a new one for 2010. If you have multiple jobs, you will need to make sure that each employer is withholding the appropriate amount to cover your anticipated total tax liability. The IRS has a withholding calculator to help you determine the correct amount to withhold. (,,id=96196,00.html)

2) Income you receive for certain types of work may be considered self-employment income and thus, potentially subject to self-employment taxes. For example, income received from odd jobs such as babysitting and lawn mowing may be considered self-employment income. If your net income from self employment is $400 or more you will be subject to self-employment tax.

3) If you are a newspaper carrier or distributor, special tax rules apply. If you provide these types of services you will need to determine if you are considered a direct seller. Direct sellers are considered self employed for federal tax purposes and therefore potentially subject to self employment taxes. According to the IRS, you are a direct seller if you meet all of the following criteria:
* You are in the business of delivering newspapers.

* All your pay for these services directly relates to sales rather than to the number of hours worked.

* You perform the delivery services under a written contract which states that you will not be treated as an employee for federal tax purposes.

In general, newspaper carriers and distributor who are under age 18 are not subject to self employment taxes.

4) Be sure to report all tip income that you receive. Tips that you receive are taxable income and subject to federal income tax. Therefore, you need to report it.

5) If you are a ROTC student who participates in advanced training and you receive an allowance, the allowance is not taxable. However, active duty pay is taxable. Be sure to double check with your employer if you think this situation applies to you.

This blog is not written or edited by or the Boston Globe.
The author is solely responsible for the content.

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D. Abraham Ringer is a CERTIFIED FINANCIAL PLANNER practitioner and a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which his articles are directed. For more information please visit
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