If your child or grandchild has recently secured employment, pass along these helpful tips from the IRS:
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• Don’t be surprised when your paycheck is smaller than you expect. Employers withhold taxes and pay them directly to the IRS.
• Keep in mind that all tip income is taxable, and you must report tip income over $20 monthly to your employer.
• Even if you don’t earn enough from your first job to owe income taxes, your employer must withhold Medicare and Social Security taxes from your paychecks.
• Any money you earn from working for others is taxable. If you mow lawns, babysit, or earn money outside a regular job, you may be considered self-employed by the IRS.
• Speak to your employer about whether they will be reporting your wages to the IRS. If you have questions, ask your parents or grandparents to put you in touch with a tax expert.
For more information about tax rules for first-time jobholders, visit IRS.gov or consult a qualified tax advisor.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov[6]
[6] IRS.gov, May 20, 2019.
