CARL WATTS & ASSOCIATES

June 06, 2016

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Tax Implications
of Summer Jobs for Children
Whether this summer is the first time your child is planning to take a job or one of many such summers, you as parents, as well as your working child, should be aware of the tax implications of this common “venture”. Just to give you an idea how big a deal the students’ summer jobs has become, know that last year, for instance, around 20,3 million youths between the ages of 16 and 24 were employed in the month of July alone.

It is also important to know what the law says about youth employment. The Fair Labor Standards Act (FLSA) sets 14 as the minimum age for most non-agricultural work.

However, at any age, youth may deliver newspapers; perform in radio, television, movie, or theatrical productions; work in businesses owned by their parents (except in mining, manufacturing or hazardous jobs); and perform babysitting or perform minor chores around a private home. Also, at any age, youth may be employed as homeworkers to gather evergreens and make evergreen wreaths. Different age requirements apply to the employment of youth in agriculture.

Many states have enacted child labor laws, some of which may have a minimum age for employment which is higher than the FLSA. Where both the FLSA and state child labor laws apply, the higher minimum standard must be obeyed.

If we managed to get your attention, go on reading to find useful information about the tax implications of summer jobs that students should know.


  • As a new employee, you’ll need to fill out a Form W-4, Employee’s Withholding Allowance Certificate. Employers use this form to figure how much federal income tax to withhold from workers’ paychecks. It is important to complete your W-4 form correctly so your employer withholds the right amount of taxes.
  • If you’ll receive tips as part of your income, remember that all tips you receive are taxable. Keep a daily log to record your tips. If you receive $20 or more in cash tips in any one month, you must report your tips for that month to your employer.

  • Maybe you’ll earn money doing odd jobs this summer. If so, keep in mind that earnings you receive from self-employment are subject to income tax. Self-employment can include pay you get from jobs like baby-sitting and lawn mowing.

  • You may not earn enough money from your summer job to owe income tax, but you will probably have to pay Social Security and Medicare taxes. Your employer usually must withhold these taxes from your paycheck. Or, if you’re self-employed, you may have to pay self-employment taxes. Your payment of these taxes contributes to your coverage under the Social Security system.
  • If you’re in ROTC (Reserve Officers Training Corps), your active duty pay, such as pay received during summer camp, is taxable. However, the food and lodging allowances you receive in advanced training are not.




  • If you’re a newspaper carrier or distributor, special rules apply to your income. Whatever your age, you are treated as self-employed for federal tax purposes if:

- You are in the business of delivering newspapers;

- Substantially all your pay for these services directly relates to sales rather than to the number of hours worked;

- You work under a written contract that states the employer will not treat you as an employee for federal tax purposes.

If you do not meet these conditions and you are under age 18, then you are usually exempt from Social Security and Medicare tax.

If you are a dependent and you have as little as $400 in self-employment income, you may be required to file an income tax return. If you work for someone else, you are required to file once you have more than $6.300 in income.

Students who have earnings from a job, sell stock, have self-employment income, or receive pension income as a beneficiary, must file their own tax return and can't include their income and tax withholdings on a parent's tax return.


As parents, you can find some useful information for you too in the following.

  • If your child is working or receiving income other than interest and dividends, they must file their own tax return. The taxes on their wages or self-employment taxes are based on their own tax rate, usually not more than 10 percent tax rate while the investment income is taxed at the same rate the parents pay.
  • Your dependent child can have any amount of income and still be claimed as a dependent as long as they do not provide more than half their own support. This includes gifts, entertainment, food, shelter, clothing, purchasing a vehicle, maintaining a vehicle, other forms of transportation and school expenses. If your child can be claimed as a dependent on your tax return, they cannot claim their own exemption. This is true even if you chose not to claim your child as a dependent on your own tax return.
  • Each dependent child under the age of 17 can qualify you for the $1,000 per child tax credit. The credit is available to you even if your child is working and paying taxes on their income. Unfortunately, the year your child turns 17 the tax credit is no longer available.

Remember, the amounts a child earns by performing services are included in his or her gross income and not the gross income of the parent. This is true even if, under local law, the child's parent has the right to the earnings and may actually have received them. But if the child doesn't pay the tax due on this income, the parent is liable for the tax.


If your child has a large amount of investment income or self-employment income instead of, or in addition to, a job, their tax return can become quite complex and it would be a good idea to talk to a tax professional.

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