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- Published on Monday, 28 July 2014 11:50
- Written by Isaac
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Summer Job Gives Tax Lessons
Commercial Bank on Staten Island shares IRS view of students’ seasonal stint
STATEN ISLAND, N.Y. -- Many students take a job in the summer, and Victory State Bank encourages them to make it a financial learning experience, as well.
If it’s your first job, it gives you a chance to learn about the working world. That includes taxes we pay to support the place where we live, our state and our nation. Here are eight things the IRS says students should know about taxes:
- Don’t be surprised when your employer withholds taxes from your pay. That’s how your taxes are paid when you’re an employee. If you’re self-employed, you may have to pay estimated taxes directly to the IRS on certain dates during the year. This is how the pay-as-you-go tax system works.
- As a new employee, you’ll need to fill out a Form W-4, Employee’s Withholding Allowance Certificate. Your employer will use it to figure how much federal income tax to withhold from your pay. The IRS has a withholding calculator at IRS.gov to help with filling out the form.
- Keep in mind that all income from tips is taxable. If you get tips, you must keep a daily log so you can report them. You must report $20 or more in cash tips in any one month to your employer. And you must report all of your yearly tips on your tax return.
- Money you earn doing work for others is taxable. Some work you do may count as self-employment. This can include jobs like baby-sitting and lawn mowing. Keep good records of expenses related to your work. You may be able to deduct (subtract) those costs from your income on your tax return. A deduction may help lower your taxes.
- If you’re in ROTC, your active-duty pay, such as pay you for summer training, is taxable. A subsistence allowance you get while in advanced training isn’t taxable.
- You may not earn enough from your summer job to owe income tax. But your employer usually must withhold social Security and Medicare taxes from your pay. If you’re self-employed, you may have to pay them yourself. They count toward your coverage under the Social Security system.
- If you’re a newspaper carrier or distributor, special rules apply. If you meet certain conditions, you’re considered self-employed. If you don’t meet those conditions and are under age 18, you are usually exempt from Social Security and Medicare taxes.
- You may not earn enough money from your summer job to be required to file a tax return. Even if that’s true, you may still want to file. For example, if your employer withheld income tax from your pay, you’ll have to file a return to get your taxes refunded. You can prepare and e-file your tax return for free using IRS Free File. It’s available exclusively at IRS.gov.
About Victory State Bank
VSB Bancorp, Inc. (OTCQB: VSBN) is the one-bank holding company for Victory State Bank. As Staten Island, N.Y.’s only community-based commercial bank, Victory State Bank operates five full-service locations on the Island: The main office in the community of Great Kills, and branches in the communities of West Brighton, St. George, Dongan Hills and Rosebank. For additional information, Victory State Bank may be reached at 718-979-1100 or visited online http://www.victorystatebank.com.