How interns are taxed and when to expect a refund
When a college student enters an internship, many questions arise ranging from whether they will have an income, to what the tax return on that income will look like the answer is simple: although not expected interns need to file a tax return the year following their internship.
Steps to take to tax internship income
All interns assume tax obligations from the moment they receive their first payment. Generally, when one receives monetary compensation for work, that income is taxed at the federal, state, and in some cases, local level.
At the federal level, wage and salary income are subject to three taxes: income tax, Social Security tax, and Medicare tax. You will likely see money deducted from each paycheck for these tax purposes. However, when filing a return some requirements depend on the minimum amount of income.
Let’s do the exercise:
The national average hourly wage for internships in 2022 in the U.S. is $15 per hour, according to ZipRecruiter, assuming a full-time intern puts in 40 hours per week for 10 weeks, we estimate a $6000 pre-tax income. If the salary from this internship accounts for most of the annual income, likely, the average intern will not earn enough to have to file a return in 2023.
However, if that average intern owes nothing, he or she could file a return with which he or she could qualify for a tax refund. You may also qualify for tax credits such as the American opportunity tax credit (for qualified college expenses) or the earned income tax credit (if you have qualified dependents), which could further increase your tax refund.
The important thing is to be informed and know how you can get a tax refund or if you qualify for one.
Subscribe to our blog