5/30: Dates to Remember; FinCEN 114; and Tips for Students with Summer Jobs
Tax Snacks: Bite-size tax news and information on the fly
- 1040s are due for U.S. Citizens and nonresident aliens who live outside the country.
- 1040s are due for members of the military on duty outside the country.
- Second quarter estimated tax payments are due for individuals and calendar year corporations.
- Form FinCEN 114 (replacing Form TDF 90-22.1) is due, reporting foreign financial holdings (see write-up below).
U.S. individuals or corporations who own or have signature authority over any foreign financial account that had a balance exceeding $10,000 at any time during 2013 may have to file Form FinCEN 114. Much more information can be found in this article or the links provided in it. As noted above, the name of the form has been changed. More significantly, beginning with the 2013 forms due in June 2014, the form must be e-filed; paper filing no longer is allowed.
The IRS offers a few useful tips here for students working summer jobs. This is useful information, but I’ll add one more tip that might otherwise be hard to find: Students who expect to owe no tax for 2014 are not required to have income taxes withheld from their paychecks. The IRS tips mention completion of a Form W-4 to help the employer know the correct amount of withholding. That involves indicating the employee’s filing status and number of allowances. Based on those selections, the employer must use IRS tables to determine how much income tax to withhold. However, those tables assume an employee will earn at the same pace throughout the year, which is not the case for summer jobs. Unfortunately, the only way to decrease the withholding is to bring it all the way to zero; no level between zero and the table-based withholding is allowed. Zero can (and generally should) be used, however, if the student expects 2014 federal income tax to be zero, and Form W-4 can indicate that selection. There are some exceptions, but generally, zero tax can be expected by a student if his or her total investment income (interest, dividends, etc.) is less than $350, total earned income (such as wages and self-employment income) is less than $6,200 and self-employment income (cash payments for services, etc.) is less than $400. Note that Form W-4 cannot be used to reduce or eliminate Social Security or Medicare Tax withholding; it only serves to optimize income tax withholding.
Students who expect to owe no 2014 taxes should be sure to properly indicate so on Form W-4. Otherwise, the only way to obtain a refund of those withheld taxes will be to file a tax return that is not otherwise required.
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