Do You Pay Taxes For An Internship? Here's What To Know
Let's face it, paying taxes is a serious bummer. However, for those young faces stepping out into the workforce and getting their hands dirty for the first time as an intern, when do these adult duties start applying to you? You might be asking: Do you pay taxes for an internship? Here's the rundown.
The answer? It depends. If you're interning at a business that's providing you with income (and in that case, congrats) then those are taxable wages just like any standard job. Plus, you'll be able to write off work-related expenses. However, if your internship is unpaid, then you won't have to worry about taxes.
However, there are a few different types of internships out there, especially for students and graduates from overseas. According to nonprofit organization InterExchange, the U.S. law requires that international interns or trainees on a J-1 visa, which covers internship programs designed for foreign university students and graduates who come the United States to work in their field, pay federal, state, and local taxes on the income they receive while in the United States. So, if you're currently working and fall under those two categories, then you better start getting to work on taxes ASAP, because they can be quite a handful.
Filing taxes is a pain, to say the least. However, there is one light at the end of the tunnel, and that's those sweet, sweet tax returns. Of course, even that might be in flux.
Early in tax season, a lot of people reportedly began getting their refunds — and they were a lot lower than people expected. As of Feb. 1, Internal Revenue Service (IRS) data showed that the average refund was more than 8 percent lower than the previous year — or in normal dollars, the average refund in 2018 had been $2,053 while as of February 2019 refunds were clocking in at $1,865.
But don't start frantically adjusting your plans of how to spend your refund, because as of early March 2019, refunds are now reportedly higher than 2018, with USA Today reporting that refunds were about $22 dollars higher on average than they had been the previous year, per IRS data. That's, like, a whole pizza's worth of money. I'll take it.
There's speculation that the changing numbers could be due in part to confusion from the Trump administration's tax cuts, which passed through Congress in 2017 and really went into effect for this year's tax season. While the Tax Cuts and Jobs Act lowered taxes, it also changed the maximum deductions for things like state and local taxes, meaning that your overall bill could be affected. There's also the possibility that it affected how your employer withheld taxes from your paycheck, which — again — would affect your overall bill.
So for now, make sure you get an early start on taxes and those tax returns, because at this point who knows what 2019 has in store for us. One thing is for sure, I'm putting that money straight to the bank.