Before COVID-19, one of the traditional rites of passage for young people was getting a summer job.
After literally being locked out last summer due to business pandemic precautions, young workers are returning. In fact, for American teenagers looking for work, this may be the best summer in years. The share of teenagers working is above pre-pandemic levels.
The staffing firm Challenger, Gray & Christmas projects teens will add about 2 million jobs to the economy this summer.
Still, despite all that economic and statistical data, getting a summer job isn't a gimme. That's why today's Saturday Shout Out goes to The New York Times' Your Money Adviser column that's straightforwardly headlined Tips for Teenagers on Landing a Summer Job.
In the article, Ann Carrns offers practical job-hunting tips for teens. And, of course, she touches on the tax matters they will face, many for the first time. This includes, of course, payroll withholding, taxes on self-employment earnings and tax-favored ways to save some of the summer money.
Get withholding right: Your indulgence, please, as I add my own emphasis to one point made by Carrns, coming up with the correct amount of income tax to be withheld from your pay. It's still fresh on my mind since it's one of the 5 June tax moves I recently recommended.
First-time earners always are stunned by payroll taxes. Some might be tempted to take any steps they can to reduce this amount.
Believe me, I get the attraction of writing "exempt" on the Form W-4 you'll have to give your employer. That document is what determines just how much income tax is taken out of each paycheck.
And claiming that you aren't subject to withholding might be the right tax move for a young worker. Or not.
If you have other income or multiple summer jobs, your best move is to follow the advice Cari Weston, director of tax practice and ethics with the American Institute of Certified Public Accountants (and one of my #TaxTwitter friends), offers Carrns and readers: Use the Internal Revenue Service's online withholding estimator calculator to determine the correct amount to put on your W-4.
OK, my personal work and taxes digression (for today) is done.
Now, if you're a young person looking to make some spending money or add to your future college fund, check out the summer job hunting tips. It's also a good read for parents who are watching their children take those initial steps into the work and tax world.
You also might find these items of interest:
- Teenagers, taxes and summer jobs
- Tax issues that impact working teens and their parents
- 10 reasons to file a tax return even if you don't have to
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