As a student, matters of taxation are a little more than taxing. For some, it can be confusing as to where you stand when paying. There is a popular myth that students don’t pay tax. This is simply not true. Everyone has to pay tax when they earn above a certain threshold. If you are in employment, your employer will automatically pay your tax on your behalf. However, if you are self-employed, you will need to pay your taxes yourself. This can be done online via government forums, or by hiring an accountant.
There are some things that you need to know about paying tax. You cannot simply avoid paying tax because you are a student. Taxation laws are there for a reason.
Let’s take a look at the considerations that you need to make when you are in paid employment.
Tax: What You Have to Pay
Income tax means that you have to pay tax when you are above a certain threshold. This is what is commonly termed as a personal allowance. In short, income tax and national insurance have to be paid when you earn over this threshold. Being a student does not give you a free pass to not paying tax. Your employer should take this sum out of your pay cheque. Alternatively, when you complete your tax return, you may be able to apply for a tax reduction. This is dependent on certain conditions. If you are under 18 years old, there may be some restrictions on the amount of tax that you pay. These particular circumstances should be investigated. You don’t want to pay too much tax. Read up on taxation law books from Lexis Nexis. These will ensure that you know your rights.
In some circumstances, you may have paid too much tax. This means that you are entitled to a refund. This is usually refunded at the end of the taxation year. However, you can check this for yourself online. However, you will be contacted by letter if you have paid too much tax. Always remember to use your tax file number in order to get a refund quickly.
Summer signals a time to enjoy working abroad. For many students, the lure of working in a foreign country is enough to get them packing up their belongings. Summer jobs enable many students to earn money over the long summer break. You will need to pay tax on your personal allowance as normal. You may also be subjected to paying the local tax within the country that you are residing within the summer.
Are You New to Tax?
If you are new to tax, you will need to make sure that you declare all income and dedication. This is done via a tax return. You need to keep an audit trail of what tax you have paid. You also need to keep proof that you have returned your tax return. Always ensure that you quote your TFN. This is a tax file number. This ensures that you are not mixed up with anyone else. This has the potential to cause taxation problems if you do not quote the right number.