Summer Tax Tips For Teenagers
My wife and I are giving ourselves high fives. All three of our teenagers have summer jobs. They’re actually making money, instead of only asking for it. Parents of teens know that’s a milestone. So what can possibly follow that? Learn who their uncle is. Uncle Sam, that is.
For teens, a summer job can be their first opportunity to put money in the bank. And their first experience with Uncle Sam taking his share out. But keeping tabs on taxes now, could make it much easier to file a return in the spring, when teens might even get some of that money back. The IRS says:
- Start by filling out w-4 forms. If you’re working multiple jobs, you’ll need this withholding form at each location, so employers withhold the right amount to cover your entire tax liability due in April.
- Working at a restaurant? Don’t forget that tips are taxable too.
- If you’re drumming up business on your own for odd jobs like babysitting and lawn care, that’s subject to income tax too.
- And if those odd jobs add up to income of 400 dollars or more, you’ll also have to pay self-employment tax.
The good news for some teens, their summer income may be so low that they end up owing little or no tax at all next April. And the good news for parents, your teenager is earning some money so he/she doesn’t come to you begging for money all the time.