Tax Tips for Students with Summer Jobs

Students often get a job in the summer. If it’s your first job it gives you a chance to learn about work and paying tax. The tax you pay supports your home town, your state and our nation. Here are some tips students should know about summer jobs and taxes:

• Withholding and Estimated Tax.  If you are an employee, your employer withholds tax from your paychecks. If you are self-employed, you may have to pay estimated tax directly to the IRS on set dates during the year. This is how our pay-as-you-go tax system works.
• New Employees.  When you get a new job, you will need to fill out a Form W-4, Employee’s Withholding Allowance Certificate. Employers use it to figure how much federal income tax to withhold from your pay. The IRS Withholding Calculator tool on IRS.gov can help you fill out the form.
• Self-Employment.  Money you earn doing work for others is taxable. Some work you do may count as self-employment. These can be jobs like baby-sitting or lawn care. Keep good records of your income and expenses related to your work. You may be able to deduct (subtract) those costs from your income on your tax return. A deduction can cut taxes.
• Tip Income.  All tip income is taxable. Keep a daily log to 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.
• Payroll Taxes.  You may earn too little 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 for your coverage under the Social Security system.
• Newspaper Carriers.  Special rules apply to a newspaper carrier or distributor. If you meet certain conditions, you are self-employed. If you do not meet those conditions, and are under age 18, you may be exempt from social security and Medicare taxes.

ROTC Pay.  If you’re in ROTC, active duty pay, such as pay you get for summer camp, is taxable. A subsistence allowance you get while in advanced training is not taxable.

Identity Theft
Help
At a Glance
If your SSN has been compromised, take these steps:
— File a police report
— File an FTC complaint
— Contact one of the three credit bureaus to place a fraud alert on your account:

• www.Equifax.com
  1-800-525-6285
• www.Experian.com
  1-888-397-3742
• www.TransUnion.com
  1-800-680-7289

— Close any financial accounts opened without your permission.
— Respond immediately to any IRS notice, according to instructions.
— Complete IRS Form 14039, Identity Theft Affidavit.
— Continue to file your tax return, even if by paper.

Other Resources

• IRS Identity Protectionhome

• FTC Identity Theft home

• IRS Publication 5027, Identity Theft Information for Taxpayers

IRS “Get Transcript” site is hacked

After discovering unauthorized access to taxpayer information through its “Get Transcript” application, the IRS is taking steps to protect taxpayers against identity theft if someone else tries to file a tax return in their name, both right now and in 2016. The agency is also sending letters to affected taxpayers with additional information, and offering credit monitoring to those whose transcript information was accessed.

Taxpayers can learn more about the situation and what the IRS is doing to protect them in a set of Questions and Answers posted to the IRS.gov website.

For more information, see the official IRS statement.

IRS Reminds Taxpayers to Safeguard their Tax Records as the Beginning of Hurricane Season Approaches

June 1, 2015

WASHINGTON – Hurricane season starts next week and the Internal Revenue Service advises individuals and businesses to safeguard their records against natural disasters by taking a few simple steps.

Create an Electronic Additional Set of Records

Taxpayers should keep a duplicate set of records including bank statements, tax returns, identifications and insurance policies in a safe place such as a waterproof container, and away from the original set.

Keeping an additional set of records is easier now that many financial institutions provide statements and documents electronically, and much financial information is available on the Internet. Even if the original records are only provided on paper, these can be scanned into an electronic format. This way, taxpayers can save them to the cloud, download them to a storage device such as an external hard drive or USB flash drive, or burn them to a CD or DVD.

Document Valuables

Another step a taxpayer can take to prepare for a disaster is to photograph or videotape the contents of his or her home, especially items of higher value. The IRS has a disaster loss workbook,Publication 584, which can help taxpayers compile a room-by-room list of belongings.

A photographic record can help an individual prove the fair market value of items for insurance and casualty loss claims. Ideally, photos should be stored with a friend or family member who lives outside the area.

Update Emergency Plans

Emergency plans should be reviewed annually. Personal and business situations change over time as do preparedness needs. When employers hire new employees or when a company ororganization changes functions, plans should be updated accordingly and employees should be informed of the changes. Make your plans ahead of time and practice them.

Check on Fiduciary Bonds

Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.

IRS Ready to Help

If disaster strikes, an affected taxpayer can call 1-866-562-5227 to speak with an IRS specialist trained to handle disaster-related issues.