Tips for Working Students

All employees have income tax withheld from their pay, right? Not necessarily. You may be exempt from withholding if:

• you can be claimed as a dependent (usually on a parent's return),
• your total 2004 income will not be over $4,850,
• your unearned income (interest, dividends, etc.) will not exceed $250, and
• you had no income tax liability for 2003.
• You'll still have to pay Social Security and Medicare taxes, but skipping unnecessary income tax withholding will put more money in your pocket now. Read Form W-4 carefully before filling it out for your employer.
• If customers tip you, those tips are taxable. You must keep track of the amounts, include them on your tax return, and - if they total $20 or more in a month - report them to your employer by the middle of the next month.