Tax Tips for Summer Interns
If this is your first job as a summer intern, you may want to know more about your tax compliances. The following are a few useful tips that may help you with your tax filing.
- Employee vs Contractor. In most situations, you will be classified as an employee receiving a W2 form. The taxes will be withheld by your employer and you will report your earned wages as part of your annual tax filing. This is a straightforward process as your employer will handle most of the tax payments.
Exceptions: There could be very few exceptions to this eg: you are working as a babysitter, assisting with lawn mowing, independent marketing salesman etc. For these jobs, you may be required to report self-employment income. You will be required to estimate the quarterly taxes and make a payment to the Internal Revenue Service to avoid any year-end tax surprises. If you do not estimate your taxes correctly, you may be required to pay penalties & interest on any unpaid taxes. So, check with a tax professional if you are unclear or require assistance with tax estimations.
2. W4 Tax withholding after you join your internship: You may be required to submit form W4. This is a form that will assist your employer to determine the amount of tax withholding that may be required from your paycheck.
3. All tip income is taxable. You are required to track and report any tips over $20 that you earned in a month to your employer. All tips you earned during the year will need to be reported on your yearly tax return.
4. Yearly tax filing: Filing a tax return may be necessary if there were any federal or state taxes withheld from your paycheck.
You may not have earned enough but your employer may still be withholding social security and Medicare taxes from your paycheck.
If you still have questions, contact us via our homepage.