Financial Planning with Children: Your Child’s First Summer Job

Whether it was selling lemonade on the sidewalk, baby-sitting for neighbors’ children, or a high-profile internship during college, we all remember our first summer job.


Summer jobs (or paid internships) are great opportunities to teach your children about money – everything from budgeting to saving.  Here’s a quick reference guide of topics when it comes to your child’s first summer job.


–       Withholding: Help your child sort through the paperwork that is involved with obtaining a job, including filling out the W4 form, which is the form used to determine the number of tax exemptions one should claim.  Importantly, if your child is a student, he/she can claim exempt from tax withholding. 

–       Your own exemption: If you want to avoid having your child file an income tax return, if his/her only income is the summer salary/wages, your child can claim exempt on the W4 and avoid filing an income tax return because he/she is earning under the threshold.  Please note, your child can only be exempt from federal and state withholding, not from social security and Medicare.

–       Claiming dependents: you can still claim your child as a dependent as long as he/she is either a) under the age of 19 at the end of the year OR b) under the age of 24 at the end of the year and a full-time student.

–       Once your child has received his/her first paycheck, it is a great time to start discussing money management, beginning with opening a bank account (checking, savings, or money market).   Receiving an ATM card can prompt an important conversation about the importance of budgeting (and how much of his/her expenses he/she is responsible for paying over the summer)

–       If your child is opening a savings account, it is a great opportunity for him/her to begin putting money away in an IRA (either a traditional or a Roth)

–       Also, make sure to check out our post on: Funding College and Graduate School Using Qualified Education Savings Programs



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