Congrats! You have a summer job and you want to keep as much as possible of that check. Oops! What about the IRS and you? Let's chat about that.
Perhaps the first thing to ask is: Do I need to file a return? A simple question, however there are many little twists and turns. Best advice is to check www.irs.gov for guidance.
Having dodged that bullet, please remember that all commercial tax programs and Internet based ones will give the correct answer with a few questions. Check the IRS site for lists of free preparers.
The determining factor is based on how much you will make, are you an employee or a contracted worker, or are you working for yourself (babysitter, lawn work, perhaps a business of your own).
Let's get started!
Let's assume you are employed by a company and have taxes taken from your check. Sorry, but social security and medicare taxes are taken from every person's check. No refund of those taxes.
The W2 form (you will get by the end of January 2013 for calendar year 2012) has the information to file a return. If someone claims you as a dependent, you can earn up to $5,950 and not file. But if-
there are federal withholding taxes, you need to file to get a refund of those. The IRS does not automatically send those to you.
A return if self-employed? Possibly, however, you earn less than $400, you do not need to file or pay social security tax or Medicare tax. This is for wages like from babysitting or lawn mowing.
If you earn more than $400 and are self employed, yep, you file and pay the social security/Medicare rate of 13.3% currently on those total earnings. Earn $1,000 - pay $133 to the IRS when you file.
World's largest chicken in Branson, MO. This has nothing to do with taxes - just comic relief. Back to taxes.
1099-MISC. What are these? If someone has you as a contract employee, you will get this form. You must file and pay the social security and Medicare tax and maybe get a refund of the withholding tax.
There are special situations beyond this guide - tips in food service jobs, interest and dividends from stock, employee of a family business, or being a ROTC student that require filing a return also.
One more item - be certain that your W-4 form is filled out correctly to avoid too much withholding. It is best to check with your employer for this one.
And when you are done with your taxes, live it up!
As you can imagine, no simple guide can cover every situation, but at least you are now thinking about how to lower your potential federal taxes.