Summer jobs are a great way for teenagers to build responsibility, gain work experience, and start learning how money really works. Whether your teen is lifeguarding, working at a local restaurant, helping at a family business, babysitting, landscaping, or interning, that first paycheck can also bring a few tax lessons.
For parents, this is a good opportunity to help your teen understand the basics before tax season arrives. A little planning now can help avoid surprises later, and in some cases, it can even open the door to long-term savings through a Roth IRA. Talking to one of the CERTIFIED FINANCIAL PLANNER® representatives at TKG Wealth Advisers* can help weigh options.
Paychecks, Taxes, and Withholding
When a teen starts a job as an employee, they will usually complete Form W-4. This tells the employer how much federal income tax to withhold from each paycheck. Depending on the job and the state, there may also be state income tax withholding like we have here in New Jersey.
Many teens are surprised to see that their take-home pay is less than their hourly rate times the number of hours worked. That is because payroll taxes may apply. Social Security and Medicare taxes are generally withheld from employee wages, even if the teen does not ultimately owe federal income tax.
Federal income tax withholding is different. If your teen expects to earn a relatively small amount for the year, they may not owe federal income tax. However, if federal tax is withheld from their paychecks, they may need to file a tax return to claim a refund.
This is why it is important to review the W-4 carefully. A teen who works one summer job may have a simple withholding situation. A teen who works multiple jobs, earns tips, or has other income may need a closer look to make sure enough tax is being withheld.
Does Your Teen Need to File a Tax Return?
A common question parents ask is, “Does my child need to file taxes?” You should consult with accounting professionals like TKG Tax & Accounting because the answer depends on the type and amount of income.
For 2026, the standard deduction for a single filer is $16,100. Many teens who are claimed as dependents and have only W-2 wages below that amount may not owe federal income tax. However, that does not automatically mean filing is unnecessary.
Your teen may still want or need to file if:
- They had federal or state income tax withheld and want to claim a refund.
- They earned self-employment income from babysitting, tutoring, lawn care, content creation, or other side work.
- They received tip income that was not fully reported through payroll.
- They had investment income or other unearned income.
- They qualify for a tax benefit or need to document income for another reason.
Self-employment income is especially important. If your teen is paid as an independent contractor or earns money from informal work, there may be filing requirements even at a much lower income level because of self-employment tax. Parents should help teens track what they earned and any related expenses, instead of waiting until tax time and trying to recreate the year from memory.
For New Jersey families, state income tax should also be considered. New Jersey has its own income tax rules and filing thresholds, so a teen’s federal and state filing obligations may not be exactly the same.
Keep Good Records From the Start
Teen workers should get in the habit of saving basic records. This does not have to be complicated. Encourage your teen to keep copies of pay stubs, W-2s, 1099 forms, bank deposit records, and a simple list of any cash income.
If they are doing side work, they should also track expenses. For example, a teen who cuts lawns may buy supplies, pay for gas, or use equipment. A teen who babysits may have mileage or child safety certification costs. Not every expense will qualify, but good records make it easier to have a productive conversation at tax time.
This is also a valuable life lesson. Learning to track income, understand taxes, and save intentionally can help teens become more financially confident adults.
A Summer Job Can Open the Door to a Roth IRA
One of the best planning opportunities for working teens is a Roth IRA.
A Roth IRA is funded with after-tax dollars. There is no upfront tax deduction, but the money can grow tax-free and may be withdrawn tax-free in retirement if the rules are met. For a teenager, time is the biggest advantage. Even modest contributions made early can have decades to grow.
To contribute to a Roth IRA, your teen must have earned income. Wages from a summer job count. Self-employment income may also count, as long as it is legitimate earned income and properly reported.
For 2026, the IRA contribution limit for someone under age 50 is $7,500, but the contribution cannot exceed the teen’s earned income for the year. For example, if your teen earns $3,000 from a summer job, the maximum IRA contribution would generally be $3,000, not $7,500.
Parents and grandparents sometimes choose to help by gifting money to the teen while the teen contributes part or all of their earned income to a Roth IRA. The key is that the contribution must be supported by the teen’s earned income. And as mentioned before, talking to our team at TKG Wealth Advisers* can help guide your teen’s investment decisions.
Make It a Teaching Moment
A summer job is about more than spending money. It is a chance to teach practical financial habits, including how to read a paycheck, understand taxes, save for goals, and think long-term.
Before the summer ends, consider sitting down with your teen to review what they earned, how much was withheld, what they saved, and whether a Roth IRA contribution makes sense. That conversation can be just as valuable as the paycheck itself. At TKG Tax & Accounting, we help families understand how income, filing requirements, and tax planning fit together. If your teen worked this summer or earned income from side jobs, our team can help you determine whether a tax return is needed and whether there are planning opportunities to consider. For longer-term savings and Roth IRA strategy, families may also benefit from a conversation with one of the CERTIFIED FINANCIAL PLANNER® representatives at TKG Wealth Advisers*.
*TKG Wealth Advisers is a New Jersey registered investment advisory, which provides discretionary investment advisory services to its clients. TKG Wealth Advisers is under common control with TKG Tax & Accounting. TKG Wealth Advisers does not serve as an attorney, accountant, or insurance agent. TKG Wealth Advisers does not prepare legal documents or tax returns.
