What to Expect Tax-Wise from Your Summer Job
You won't know what to expect tax-wise from your summer job unless you consider factors other than how much you earn.
Key Takeaways
- If you meet the filing threshold, summer job income should be included on tax returns, even if you only worked for a few months and were not required to file taxes in previous years.
- To determine if a tax return is necessary, taxpayers should compare their total income to the automatic deductions they can take for their filing status.
- Students who work during the summer may be eligible for tax credits and deductions that can reduce their tax bill.
- Dependents have different filing requirements and thresholds, and their earned income is subject to different rules than their unearned income.
Summer employment income
Maybe you’re a student who only works during the summer, or a teacher who prefers to keep busy with a second job when school isn’t in session. Regardless of your reason, you won’t know what to expect tax-wise from your summer job unless you consider factors other than how much you earn.
Most taxpayers can earn a certain amount of income each year without having to pay taxes or file a return. However, if you must file a tax return, you must report all employment income, regardless of when you earn it, including income reported on a W-2 by your summer employer.
TurboTax Tip:
Full-time students who work only a few months during the summer may not need to file a tax return, but may want to do so if they are eligible for a tax refund.
Should you file?
When no one else can claim you as a dependent, you can figure out whether filing a tax return is necessary by comparing the total income you earn from your summer job (and all other jobs) to the amount of automatic deductions you can take for your filing status.
- If your income is less than this, you do not need to file a tax return.
- This also means you won’t owe any tax on your summer job earnings.
- Check the IRS website for the latest figures to do this calculation.
Student dependent issues
If you are a full-time student for most of the year, you may find you won't need to file a return if you work just two or three months of summer. However, if you’re eligible to receive a refund of any taxes withheld from your paychecks, you will want to file anyway to get that money back.
If you're still claimed as a dependent on your parents' tax return,
- The ordinary filing thresholds do not apply to you.
- You will need to file a tax return if your total earnings are greater than the Standard Deduction available to filers claimed as dependents.
- These dependent filing rules only apply to your earned income.
- You will also need to file in 2024 if you received unearned income in excess of $1,300, regardless of any other earnings. This increased from $1,250 for 2023. Unearned income covers non-employment income such as interest and dividends.
Other ways to lower your tax bill
Regardless of how you determine your filing obligations, there are ways to reduce your taxable income.
- Several credits and deductions can reduce your tax bill, some of which are available for the expenses you incur as a student.
- If itemizing saves you more in tax than the Standard Deduction, filing a Schedule A with your return can further reduce your taxes.
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