Is your child planning to take a summer job to earn some extra money? If so, understanding the tax implications is essential. At Alpha Professional Services LLC, we’re here to guide you and your child through this process with these helpful tax tips:
Key Tax Considerations for Summer Jobs
- Income Thresholds: In 2017, your child can earn up to $6,350 without paying federal income tax. If their earnings won’t exceed this amount, they may claim “student-exempt” when completing the Federal Withholding Allowance Certificate (Form W-4). This can prevent unnecessary federal tax withholding.
- Filing Requirements: If your child’s income stays below the $6,350 threshold, they may not need to file a federal tax return. However, keep in mind that other sources of income—such as self-employment earnings, tips, interest, dividends, or stock sales—can impact their filing requirements.
- Social Security and Medicare Taxes: Even if your child doesn’t owe federal income taxes, Social Security and Medicare taxes will still be withheld from their paycheck. Explain to your young worker that these deductions are required and not considered income taxes.
- IRS Guidelines for Dependents: To qualify as your dependent under the IRS’s “qualifying child” test, your child must be younger than you and either:
- Under 19 years old, or
- A full-time student under 24 years old as of the end of the calendar year.
Let Us Help!
Navigating the tax rules for a child’s summer job can be complex, but you don’t have to do it alone. At Alpha Professional Services LLC, we can provide detailed guidance tailored to your situation.
Contact us today at (215) 706-0800 to ensure your family understands all the tax implications of summer employment. We’re here to help you plan ahead and make informed decisions!