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Your Teen's First Income

Managing money and expectations

Now that your teen is making money, it's important to help manage expectations along with the actual income. From managing their paychecks to paying taxes, you can help your teens act responsibly by sharing a few basic tips.

Handling a paycheck

A paycheck from a first job is likely the most income your teen has had so far. You want to help them understand that this isn't an invitation to spend more but a chance to learn how to be responsible. Give them these tips to help them handle their paycheck wisely:

  • Open a checking account and a savings account, if this hasn't happened already.
  • Consider linking a debit card to the checking account.
  • Learn how to balance a checkbook.
  • Look carefully at each pay stub, and check the rate and hours for possible mistakes.
  • Deposit checks immediately—or use direct deposit.
  • Never use a check-cashing service or “payday loan” service, because they charge higher interest rates and fees than banks or credit unions.

Paying taxes

Of course you want to help your kids understand that once they start earning income, Uncle Sam will expect his part. Here are some initial tips for dealing with taxes:

  • Help them prepare for the tax bite. Many young people are disappointed to see how taxes have eaten away at their take-home pay.
  • Help your teen fill out their Form W-4. For now, because your teen is your dependent, he or she is not entitled to claim an allowance. But this can be a great opportunity to explain how withholding works.
  • If the employer doesn't withhold taxes, make sure your teen sets aside enough money to pay his or her own taxes come April.
Our Two Cents
Because your teen is your dependent, his or her taxable income is linked to yours. Get more detailed information about income taxes.


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