For teenagers working summer jobs, here are some tips for getting the most out of their paychecks.
- Withholding and Estimated Tax. Every teen will receive a W-4. If your child does not plan to make more than $5,700 during the entire year, then it's worthwhile to claim the exemption from income taxes.
- Self-Employed Teens. Those who babysit, mow lawns are do other jobs for cash, that income is taxable. If you make more than $400, a good rule of thumb is to hold out 15 percent to cover any taxes for which you may be liable.
- Tip Income. For waiters and waitresses, tips are taxable. You have to report tips of $20 or more in a single month to the employer.
- Newspaper Carriers. Special rules apply. Those under 18 may be exempt from Social Security and Medicare taxes.
You can see what applies to your child on the IRS’s summer job tax information.