COLUMBIA, S.C. (WCBD) – The summer season brings warmer temperatures, family vacations, and even special tax situations.
These special tax situations are a result of teen summer jobs and gig work with W-4 forms, and using summer camp expenses for a child care credit.
Nationwide, more than one million teens look for jobs during the summer time, according to a U.S. Bureau of Labor Statistics report.
SCDOR suggests these tips for working teens to keep in mind this summer:
- One of the first things teens must do when hired is fill out a W-4 form so their employer can calculate how much in taxes should be taken out of paychecks. Many, if not most, will owe no tax. Even if teens are exempt from withholding, they can still expect to see deductions from paychecks for Social Security and Medicare, according to the IRS.
- Many teens find jobs in the food industry or do odd jobs. Tip income and self-employment, sometimes called gig work, are taxable and should be recorded and included on teens’ tax returns next year.
- If a teen receives pay for Reserve Officers’ Training Corps (ROTC) summer activities, that pay also is taxable, the IRS notes.
Summer can also offer seasonal employment, based on the weather and the nature of certain industries such as tourism.
SCDOR also suggests tips for seasonal work:
- Whether workers receive most of their money in tips, cash, from employers, or are self-employment, all of their income is taxable and should be reported on tax returns.
- Keep good records of business expenses and income if summer income is from self-employment.
- Deductions can lower a tax bill, but they must be supported by records. Double check the rules for deducting expenses related to use of things like a personal car or house. Read our tips for gig workers for more information.
Summer camp programs may also offer tax breaks for parents who work, or are looking for work.
Parents may be eligible for tax breaks in the form of federal Child and Dependent Car Tax Credit:
- According to the IRS, parents can claim up to 35% of child care expenses, with a limit of $3,000 for one child or $6,000 for two or more, and those expenses can include the cost of childcare at a day camp.
- South Carolina residents can also claim the Child and Dependent Care Credit on their SC1040 equal to 7% of the child care expenses allowed for the federal credit.
- The name, address and taxpayer identification number of all care providers must be included on any tax return claiming the credit. The childcare provider cannot be the taxpayer’s spouse, dependent, or the child’s parent.
For more information on South Carolina Individual Income Tax or tax credits, visit the SCDOR at dor.sc.gov/IIT.