While students may receive some tax-free income in the form of grants and scholarships, any compensation they receive as employees is subject to the same federal and local taxes everyone else pays. Their employers also are obligated to withhold Social Security taxes from their paychecks. Whether you receive any of your taxes back will depend on how much you earned and how much tax you paid.
Unless you work as a freelance contractor, your employer must withhold federal, state and local taxes from your paycheck. The amount he withholds will depend on how many deductions you claim on the W-4 you fill out when you first go to work.
In addition to federal income tax and any state and local taxes you may owe, your employer will withhold Social Security and Medicare taxes. No matter how little you earn or how many deductions you take, you will not get any of that money back.
Your Status May Cost You Money
If you're a full-time student and depend on your parents for some support, even though you're working after schools, they may claim you as a dependent. If they do, they can claim a personal exemption worth $3,800 as of September, 2014. You, on the other hand, will lose the right to claim that exemption. When you file your tax return, ask your parents if they're claiming you on their return.
Call in the Pro
If your parents claim you as a dependent, it may also alter how you calculate your standard deduction, and you'll lose the few tax credits that may be available to you. You and parents should ask a tax professional to compare your returns to determine whether it's more financially advantageous for your parents to claim you as a dependent.
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