An excellent time to discuss taxes and withholdings with your teen is at the start of his or her employment when he is filling out a W-4 tax form. Instruct your teen to bring the form home rather than attempting to fill it out at work. This is a great time to explain each line item and go over the following information. If your teen has already begun to work, ask him to get a new W-4 tax form from the human resources representative at work and bring it home to be sure it is accurate and your teen understands the information.
A part-time or summer job is typically a teen’s first introduction to the notion of paying taxes. Most teens will not have to file a tax return if they are claimed as a dependent on another taxpayer’s return (typically a parent or guardian) and their total earned income is less than the standard deduction, which will be $6,300 for 2016 tax filing.
If the teen’s gross income is determined to be less than $6,300 it’s best to claim “Exempt” when filling out the W-4 form provided by the employer. This will ensure that no federal or state income taxes will be withheld and a personal tax return will not have to be filed. If the teen’s earnings are expected to be more than $6,300 per year, claiming “single 0” status is the way to go.
Be sure to educate your teenager that all workers, no matter the age, are subject to Social Security withholding at 6.2 percent, and Medicare withholding at 1.45 percent. These amounts are automatically withheld from the gross payroll at a combined rate of 7.65 percent. In addition, California requires most workers to be subject to State Disability Insurance (SDI) at a rate of .9 percent (2016). Other deductions, such as health insurance or retirement, are voluntary and generally do not apply to most teens.
Posted in: Youth & Teen
Comment Policy: All viewpoints are welcome, but comments should remain relevant. Personal attacks, profanity, and aggressive behavior are not allowed. No spam, advertising, or promoting of products/services. Please, only use your real name and limit the amount of links submitted in your comment.
You Might Also Like...
Planning for College in Middle School – It’s Not Too Early
If you plan on sending your child to college you may wonder: how early should I begin planning? Besides saving for tuition and other expenses, what additional steps should I […]
Nurturing Young Entrepreneurs – June 5 Lemonade Day and Pennies on Purpose
I was just four years old when the health department (also known as Mom) shut down my first business, a door to door enterprise selling baggies of strawberries picked out […]
Host Homes Program – A Safe Place For Homeless Youth
Each day in the United States, 50,000-100,000 young people 18-24 years old are either homeless or living in unstable home situations. Research has shown that homelessness can lead to severe […]
Showing Up for Children Makes a Lasting Impression On Their Brains
Showing up in our lives and in the lives of our children is the juicy nectar of living fully. There is big meaning in that sentence. Take a moment to […]
