Part-Time Employees

admin • February 19, 2019

Are you a part-time or seasonal worker? Although you generally must comply with the same tax rules as full-time workers, you may face special challenges at tax return time. Here are five potentially tricky tax areas:

Tax returns: Do you even have to file a 2018 tax return? Not if you’re single filer with taxable income under the standard deduction amount of $12,000. But it doesn’t hurt to file a return, especially if you’re entitled to a refund as a result of credits or withheld taxes.
Payroll taxes: Usually, you owe the same payroll taxes, including FICA and FUTA, as other employees. But you’re exempt from the FICA requirement if an unincorporated parent employs you and you’re younger than age 18 (or younger than age 21 for FUTA). If you haven’t done so already, claim the exemptions on your W-4 for 2019.
Kiddie tax: Generally, the kiddie tax is imposed on unearned income above $2,100 received by a dependent child younger than age 19, or full-time student younger than age 21. (The limit increased to $2,200 for 2019.)But this tax complication doesn’t apply to earned income, like wages. So you can take home part-time wages without any kiddie tax concerns.
Tips: There are plenty of part-timers who work in service industries where they receive tips. Be aware that the IRS requires you to include all tips in your taxable income. Report tips to your employer if you receive more than $20 a month. Your employer then must withhold income and payroll taxes on those amounts.
Education credits: The only issue with this one is if you miss out on a savings opportunity. If you’re going to school while working part time, you may qualify for a higher education tax credit. For instance, you may claim the American Opportunity Tax Credit (AOTC) on your 2018 return, up to a maximum of $2,500 of qualified expenses.

“Tax Tips” are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in “Tax Tips,” or if you’d like to be on our mailing list to receive other tax information from time to time, please contact our office.

The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.

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