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| For Individual >> |
Student |
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| Taxable Income for Students |
The following kinds of income often received by students are generally taxable.
- Pay for services performed
- Self-employment income
- Investment income
- Certain scholarships and fellowships
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Pay for Services Performed |
When figuring how much income to report, include everything you received as payment for your services. This usually means wages, salaries, and tips. |
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| Wages and Salaries |
The amount of wages (including tips) or salaries you received during the year is shown in box 1 of Form W-2, Wage and Tax Statement. Your employer will give you Form W-2 soon after the end of the year. |
| Tips |
| All tips you receive are income, and subject to income tax. This includes tips customers give you directly, tips customers charge on credit cards that your employer gives you, and your share of tips split with other employees. |
| Reporting tips to your employer |
| If you receive cash, check, or credit card tips of $20 or more in any one calendar month while working for one employer, you must report the total amount of your tips to your employer by the 10th day of the next month. If the 10th falls on a Saturday, Sunday, or legal holiday, give your employer the report on the next day that is not a Saturday, Sunday, or a legal holiday. |
- Your name, address, and social security number
- Your employer's name, address, and business name (if it is different from the employer's name)
- The month (or the dates of any shorter period) in which you received tips
- The total tips required to be reported for the period
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| Withholding on Tips |
Your employer must withhold social security tax and Medicare taxes or railroad retirement tax, and any income tax due on the tips you report. Your employer usually deducts the withholding due on tips from your wages. If your wages are too small for your employer to withhold taxes, you may give him or her extra money to pay the taxes up to the close of the calendar year. Your employer should tell you how much is needed. |
Any taxes that remain unpaid may be collected by your employer from your next paycheck. If withholding taxes remain uncollected at the end of the year, you may be subject to a penalty for underpayment of estimated taxes. |
| Form W-2 |
| The tips you reported to your employer will be included with your wages in box 1 of Form W-2. Federal income tax, social security tax, and Medicare tax withheld on your wages and tips will be shown in boxes 2, 4, and 6, respectively. |
| Your Form W-2 may show an amount in box 8, "Allocated tips." This is an additional amount allocated to you if tips you reported to your employer were less than the minimum amount expected to be earned by employees where you work. |
If you do not have adequate records of your actual tips, you must report at least the amount of allocated tips shown in box 8 on your w2 form.
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| If you did not report tips to your employer as required, you may be charged a penalty in addition to the tax you owe. If you have reasonable cause for not reporting tips to your employer, you should attach a statement to your return explaining why you did not.. |
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| Investment Income |
| This section explains whether you have to report income from bank accounts and certain other investments. Various types of investment income are treated differently. Some of the more common ones are discussed here. |
Interest -: Interest you get from checking and savings accounts and most other sources is taxable. |
| Taxable Scholarships and Fellowships |
If you received a scholarship or fellowship, all or part of it may be taxable, even if you did not receive a Form W-2. Generally, the entire amount is taxable if you are not a candidate for a degree. |
If you are a candidate for a degree, you generally can exclude from income that part of the grant used for:
- Tuition and fees required for enrollment or attendance, or
- Fees, books, supplies, and equipment required for your courses.
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You cannot exclude from income any part of the grant used for other purposes, such as room and board. |
| A scholarship generally is an amount paid for the benefit of a student at an educational institution to aid in the pursuit of studies. The student may be in either a graduate or an undergraduate program. |
A fellowship grant generally is an amount paid for the benefit of an individual to aid in the pursuit of study or research. |
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