Income tax on teenagers summer job

Our youngest son has a summer job & just got his first weeks check-$187.00. What I don’t understand are the deductions.
They withheld about $14 for Socialist Security. That sounds about right. But they only took off 53 cents for state income tax. And they didn’t deduct anything for federal tax. Nothing. Not one cent. Why? I realize he won’t make enough money this year to have to owe Uncle anything, but when I was 15 I’d make a lousy 20 bucks and they’d at least take something off for federal. I told him to check with the payroll officer of his employer, but he won’t be seeing her for over a week. So I’m asking you folks. Any idea why a major fast food chain wouldn’t deduct anything for federal on a 187 dollar check?

Look at his W4 form to see if a complete exemption on withholding was claimed, And ask the company to see if it was accidentaly entered as an exemption in some computer.

That’s what I think happened, but he swears up and down it didn’t. I’ve had the same job for over 15 years so it’s been a while since I filled any of those forms out. I think we probably won’t get the answer until he get’s to talk to the payroll woman next week.

Sounds right.

Keep in mind that there is just one tax table. The IRS doesn’t differentiate between summer jobs, second jobs, and primary job.

If junior is paid bi-weekly, then the formula takes the taxable wages (in this case ~$185), annualizes it and taxes it based on the graduated tax tables. If he makes $185 every 2 weeks, that’s only $4800 a year. Since the standard exemption (or the amount up to which will not be taxed at all) for a single person is higher than that, he won’t owe any taxes, nor will any be taken out.

A wrinkle in this system is people who work more than one job. There’s just one tax table; it doesn’t differentiate between “first job” “second job,” etc. So if you work a second job, the taxes are considered as if this was your only income.

Example: If John person makes $50,000 in one job and $12,000 on a second job, his combined gross income is $62,000. However, very few taxes will be taken out of the second job’s gross, because Uncle Sam looks at $12,000 and thinks that this person is making beans. Because, of course, the tax tables don’t realize that John makes $50g at another job. So if John isn’t careful, he’ll end up owing a bunch of money at the end of the year to make up for the taxes that weren’t deducted from job 2.

Example 2: Joan makes $6,000 in job one and $6,000 at job 2. Since neither is above the taxable threshold, NO taxes are taken out at either place. However, on April 14th, Joan will owe ~$1000 (or 15% of all money above the standard exemption). Oops.

When I was payroll administrator, I always advised people who worked two jobs to fill out the W-4 very conservatively. There are ways to increase the amount of taxes taken out. Claim fewer dependents, for example. Claim single instead of married. Fill in the line that says “Additonal $ taken out each pay.”

BTW, if junior is getting paid WEEKLY, then $10,000 is above the taxable threshold (~$5,000, I believe). If this is the case, he should change the W-4 to claim Single, 0.

If no taxes are still being taken, then he should multiply his anticipated annual salary, less the standard exemption (5,000?), by 15%. Divide that number by the number of paychecks he expects to receive and fill that number in the line that says "Extra taken out each pay."

Good luck!

Lisa: since the Op said it was only a summer job, it is unlikely the kid will earn enuf to even have to file. So, he should claim single & 2. And, based upon the info, the employer is doing it about right.

And he expects to continue the job when school starts in September, but I haven’t approved that yet. His grades in the private school I’m paying 11 thou a year for him to attend are more important than $6 an hour! I told him to bring any paper work to me so I could help him fill it it out, but he’s in that “I know more than my old man” stage that teenage boys go through, and he just filled it out. It’s not the end of the world. I am justcurrious about the non-with holding, that’s all.

Uniformed post here.

Does John Q. Public’s parents write him off as a dependent? I know in my case this created problems with my parents accountant.

I’d right off the cat if I thought I could get away with it!
I doubt he’ll make over 5 grand this year. (remember, there is only 51/2 months left). When this started, he showed me his check. I saw the deductions (or lack of) and his first response was “duh, I don’t know. I’m gonna go watch MTV now”. More questions lead to “I’m not sure what I put down. Move pop, your blocking MTV” Then he told me this or that. Then he says that or this. God, teenagers drive me nuts!

No. The point I’m getting at is that you can write off ‘loans’ to your sons/daughters.

My father’s a big ‘anti-tax’ guy, or at least his accountant is, and I had to sign for loans that were never re-paid. There was never any intention to repay the loans but the accountant saw it as a ‘bad loan’, ‘default’, ‘something-or-other’, deduction.

Obviously I don’t know dick about deductions and how they work or help the average person. It’s just what we did for some kind of tax advantage.

I know what it’s like paying taxes at the end of the year. Big-time rip-off. One restaurant I worked at ensured us taxes would be taken out of the check every other week. ‘The computer handles it’ they said. The place folded after a year and each and every one of the server’s and bartender’s were audited. I fought and lost. The I.R.S. guy was so bad that he asked me how much money I had on me at the time of the audit. Bottom of the barrel if you ask me.

While I grew up disagreeing with my father and his tax habits, I grew closer to him after my audit.

Talk to someone free in the phone book. They might have ideas you may not have thought about.

Myself? I’m happy sticking with Quisp and how to get it.

What’s so bad about not having money taken out each week? You don’t pay any more at the end of the year than if you paid on the “installment plan”, and you get interest in the meantime.

I think it’s because you get hit big time at once.

In my case, the guy wanted something like $1200.00 at that moment. That’s pretty hard to come up with if your working for peanuts. And I know for a fact they show no mercy.

Better to have them take out more than they should than be straddled with a massive (relatively speaking) payment at the end of the cyclce.

Sometimes, kids working part time or summer jobs are advised to fill in multiple dependents to reduce the tax withholding. Since they won’t owe any federal tax (assuming they only work the summer job and are under the minimum), there’s no penalty for not having had tax withheld.

However, presumably they would have TOLD him about the consequences of saying that he has 0, 1, 2 or 6 dependents.

Lisa’s EXAMPLE 2 – Joan earns $6,000 at each of two jobs, so total of $12,000, but no tax withheld on either of the jobs because below threshold… Yet still owes income tax at end of year. And it’s worse. She also may be subject to penalties for not having had withholdings or making estimated tax payments.

I don’t know if this applies, but occassionally I work with the company my mother works for. They need help on occassion and take on outside folks for the day. While I had to fill out the forms to get started, they don’t begin deducting taxes from it until you hit a certain point of income (I think it was like $300 or $500) so my first few checks of the year are income tax free. I still get a W-2 in January and all so it’s not like they’re trying to scam the government (and why would they get in trouble to save me a few bucks?) it’s just how the system works. See if they’re still not pulling taxes three paychecks from now. Or better yet, just ask your employeer (or rather, have him ask his).

pkbites, I have the IRS’ Circular E, Employer’s Tax Guide for 2000, right here and it does show that a single person paid biweekly who claims one exemption would have no federal taxes taken out for a gross paycheck of $187.00.

That doesn’t mean he won’t owe taxes at the end of the year – he might end up making enough total income to owe.