I'm an undergraduate student, and one of my teachers asked me & my friend to work with him in the summer break (1 month remaining) and he would award us internship certificate from his lab (paid internship), to which we agreed. Additionally, he is also expecting us to be doing our final year project with him. While working with him, we have realized that our interests do not align with the work we are doing and it is going to be a hassle to be doing our final-year in this field. Besides, I don't like the attitude of the teacher and I don't think I can go along with his attitude. How can we politely decline doing a project with him in the future, or more preferably, now?
Tell him the former reason: "we have realized that our interests do not align with the work we are doing". It's a reason everyone can empathize with. It's also a big problem for any would-be project: would a supervisor even want a student who isn't really interested in the work?
I would suggest waiting to tell him though. It doesn't sound like you need to decide now, in which case you might as well keep your options open (besides the next month could be pretty awkward if he knows you don't find the work interesting).