Summer jobs can be financially rewarding, but they can also come with tax consequences that are sometimes overlooked. Here are several ideas for seasonal workers on managing those taxes.

Understand taxes for seasonal workers

Keep it separate. Mowing lawns, babysitting, or doing other cash jobs where you haven’t filled out a Form W-4 for tax withholdings, the IRS may consider you to be a business for tax purposes. If you are deemed to be in business, it’s a good idea to keep your business transactions separate from personal transactions. When you commingle both types of transactions, the IRS may disallow all business expenses and leave you with a much higher tax bill.

Document your driving. If you are driving for business purposes, document your mileage as it happens. The IRS allows 70 cents a mile for the portion of driving time you spend on business use. Use an app or driving log to record your business driving, and be sure to keep all receipts.

Keep your receipts. To deduct a business expense, you must prove that you have paid for it. The IRS states that any record-keeping system is acceptable as long as it clearly shows your expenses. Keep receipts, canceled checks, bank statements, and other easy-to-understand records of what you spent the money on and when. Many bookkeeping and accounting systems can help digitize these records, making them easier to corral for tax time.

Plan ahead for tax time

Calculate your estimated tax bill. Plan to file a tax return (it may be your first return) early next year. Depending on how much you make the rest of the year, you may get back every dollar that was withheld from your paychecks for taxes. If you are self-employed for your summer job, remember to set aside some of your earnings to pay federal, state, and local taxes.

Remember that all income is taxable. No matter how you earn your money, all earned income is taxable. Even tips, cash payments, and income from freelance platforms must be on your tax return. If you receive a W-2 from an employer, the income is automatically reported to the IRS. If you work as a freelancer, you may receive a 1099 form. But even if you don’t get a 1099, you’re still responsible for reporting all income you earn.

Summer work can provide much more than a temporary income boost — it can also be an opportunity to build good financial habits. By staying mindful of your tax obligations, you can avoid tax surprises and enjoy your hard-earned money.