Summer Employment for Your Child

Article Highlights

• Higher Standard Deduction
• IRA Options
• Typical Summer Jobs for Young Adults
• Self-Employed Parent
• Employing Your Child
• Tax Benefits

Summer jobs for kids provide more than just extra money; they teach vital life lessons and skills that can help young people in both their personal and professional lives. Summer jobs may be a transformative experience for anyone wishing to save up for a special purchase, get work experience, save money for the future, or simply spend their time wisely.

Summer is almost here, and your kids could be looking for a summer job. The standard deduction for single adults grew from $14,600 in 2024 to $15,000 in 2025, allowing your child to earn up to $15,000 without paying income taxes.

Furthermore, they can contribute the lesser of $7,000 or their earned income to an IRA. If they contribute to a traditional IRA, they might earn up to $22,000 tax free by combining the standard deduction with the maximum allowed deductible contribution to an IRA for 2025, which is $7,000. However, for the future, a Roth IRA with tax-free compounding and disbursements might be a preferable option. However, donations to a Roth IRA are not deductible.

Even if your child is hesitant to give up any of their hard-earned money from summer or regular employment, if you have the financial resources, you might gift them the monies to make the IRA contribution, giving them a good start and perhaps a lasting motivation to save for retirement.

Examples of conventional summer and year-round part-time jobs for young adults include:

• Fast Food Services - Summer employment like flipping burgers and making lattes and cappuccinos are a popular way for young people to start their careers. Working at a fast food restaurant can give youngsters with vital skills and experiences that will lay a solid foundation for their future employment. The worker's employer will provide them with a Form W-2, which details their annual pay as well as any income tax and FICA withheld. If the worker received tips, they may already have been included in the reported pay; but, if not, the tips must be reported separately on their tax return, thus the worker should keep track of the tips received.
• Babysitting - promotes responsibility and caregiving skills. Kids can begin by offering their services to neighbors or family friends, gradually establishing a reputation as a dependable caregiver. To acquire parents' trust, you must first learn basic first aid and complete a safety training. The income received while babysitting may be taxed, although sitters rarely obtain W-2s from the parents who have hired them to care for their children. Even so, the money may be reportable, depending on the sitter's overall annual income.
• Lawn Mowing and Gardening - Kids may earn money while enjoying the outdoors. These vocations instill valuable skills including time management, work ethic, and fundamental company management. Kids who work for themselves can offer package deals for regular services to ensure a consistent source of income. If the child is engaged by a company that provides gardening services, the income should be recorded on a Form W-2; otherwise, the income, like that of a babysitter, may be reportable, depending on the child's total earnings for the year.
• Lifeguarding - For older kids with great swimming skills, lifeguarding at a community pool or beach can be an excellent summer employment. CPR and first aid certification is required, as these are critical life-saving abilities. The child should be treated as an employee and issued a W-2 form by the business.
• Pet Sitting & Dog Walking: Turn your passion for animals into a summer employment by giving these services. This work teaches children responsibility and empathy for animals while also providing them with the opportunity to spend time with pets. Earnings from these activities may be reportable and taxable, depending on the amount received, and the youngster is unlikely to receive a Form W-2.
• Art and Craft Sales - Talented individuals can sell their creations at local markets or online. This position encourages innovation and teaches marketing and entrepreneurship skills. If the artist is doing this as a hobby, all sales must be reported if they are obliged to file a tax return. If the child plans to run this as a business, just the excess of the sales amount over the cost of materials and supplies will be taxable. Of course, in either case, if the child's standard deduction exceeds the revenue from their sales, none of it is taxed.
• Online Tutoring - Students that excel in academics can provide online tutoring services to younger students. This employment helps individuals strengthen their own knowledge while also developing their teaching and communication skills. The child should keep track of their profits from these services, since they may be reportable based on the child's total annual income.
• Social Media Management - Teens with strong social media skills can provide management services to small businesses wishing to boost their online presence. This can include creating content, scheduling postings, and connecting with followers. If the youngster is recruited as an employee, the company will provide a Form W-2 at the conclusion of the year. The teen's earnings from "free-lancing" should be documented since they may need to be reported on the child's tax return.
• App or Game Development - For tech aficionados, designing applications or games can be both a learning opportunity and a financial endeavor. There are many free materials and platforms available to help children get started with coding and development. Whether the child is doing something as a pastime or intends to turn it into a business and gets compensated for their time or expertise other than as an employee, the child should keep track of their profits because they may be taxed.

These are only a few examples of typical jobs for young adults, as well as the tax consequences of their earnings.

Self-employed Parents Employing Their Children

With vacation time approaching and staff leaving for summer vacations, if you are self-employed, you may want to consider hiring your children to help out with your business. Financially, it makes more sense to keep family members working rather than hire strangers, if the family member is qualified for the position.

Rather than using your after-tax earnings to support your children, you might employ them in your firm and pay them with tax-deductible dollars. Of course, the employment must be lawful, with pay commensurate with the hours and job performed. A reasonable remuneration paid to a child minimizes the parents' self-employment income and tax liability by moving income to the child.

If the firm is unincorporated and the earnings are paid to a child under the age of 18, the compensation will be exempt from FICA (Social Security and Medicare taxes) since employment for FICA tax purposes does not include services provided by a child under the age of 18 while employed by a parent. As a result, the child will be exempt from paying the employee's share of FICA taxes, as will the firm.

A similar but more permissive exemption applies to FUTA, which exempts from federal unemployment tax payments received to a kid under the age of 21 while working for his or her parent. The FICA and FUTA exemptions also apply if a youngster works for a partnership made up entirely of his or her parents. However, the exemptions do not apply to incorporated enterprises or partnerships with non-parent participants. Even so, there is no additional expense to your firm if you hire a youngster to do something that you would otherwise pay someone else to accomplish.

Retirement Plan Savings

Referring back to our original example, if the child made a $7,000 traditional IRA contribution, the taxable income and tax would be $0. As a result, it may be prudent to make a Roth IRA contribution instead, especially since the child has many years till retirement and the future tax-free retirement advantages will considerably outweigh the current $100 savings. Of course, some youngsters will not consider retiring at such a young age and may oppose to contributing to an IRA. If such is the case, perhaps you, as the parent, or even the grandparents, can make a gift of the IRA contribution, which can grow to a substantial sum by the time the child reaches retirement age.

Benefits of Summer Jobs for Kids

• Summer jobs can help youngsters acquire important skills like communication, teamwork, and problem-solving.
• Earning money teaches children understand budgeting, saving, and financial responsibility from an early age.
• Work Ethic: Having a job promotes a strong work ethic and the importance of hard effort.
• Working outside the house promotes independence and confidence.
• Summer jobs can introduce children and young adults to the tax system for the first time.

In conclusion, summer jobs offer several chances for children to learn, grow, and earn. By looking into multiple choices, individuals can choose a profession that matches their interests and skills, laying the road for future success.

If you have any queries about your child's work or hiring them in your business, please contact this office.