With summer here, many teens will be getting summer jobs to make a little money and gain valuable job experience. Here are some tips for those entering the work force over the summer:
- Make sure to identify a superior who can act as a reference. These days many high school graduates and even some college graduates have no work experience that they can list on their resume. Therefore, listing a previous job, even if it is a part-time summer job, can give a candidate a leg up when applying for future jobs. However, it is important to have a reference that can verify the prior employment. Rather than trying to track down a supervisor’s contact information years after the fact, plan ahead and identify a good reference now.
- Don’t forget about Social Security and Medicare taxes. Even low-income workers are required to pay a portion of their wages in Social Security and Medicare taxes which often comes as a shock when a teen gets their first paycheck. However, an employee earns one credit toward Social Security retirement benefit for every $1,640 earned in a year with a maximum of four credits earned in a calendar year. Racking up these credits early can be valuable down the road. For example, workers under age 24 only need to have earned 6 credits in the prior three years to qualify for Social Security Disability Benefits. So, get those credits early to qualify for disability insurance.
- Wage income can also make a teen eligible to make contributions to a retirement plan, including a Roth IRA. A Roth IRA does not provide a tax benefit when contributions are made but the contributions and the earnings may be withdrawn tax-free in retirement if all of the requirements are met. The combination of tax-free growth and a long-term time horizon for the investment value to grow can make Roth contributions very valuable. The contribution limit is the lesser of the owner’s earned income or $6,500 in 2023.
- Do not opt out of tax withholding. Many teens think they will not make enough money to owe income taxes, and many will be right. However, with the minimum wage increased in many states and some teens earning more than minimum wage it is possible the summer work, combined with potential earnings during other times during the year, that a teen may earn more than the $13,850 standard deduction. Besides, the tax withholding is based on the level of earnings of each paycheck so a low earnings level will likely result in a small amount of tax withholding. The worst case is getting a small refund at tax time while getting an education on the tax filing process at an early age.
- Seek out job skills. Every job, no matter the level or pay, requires valuable job skills. Learning to work with other people, communicate effectively, and providing good customer service are skills that can be taken into many professional settings in the future. Following directions, promoting workplace safety, and diligent work ethics are prized traits in the trades as well as other settings.
- Seek out responsibility. Some summer jobs give teens the opportunity to take on a leadership position over other workers. This not only looks good on a resume or college application but is also a great opportunity to learn leadership skills that can be built upon and lead to leadership opportunities down the road.
- Don’t forget to network. It is never too early to start building a professional network as you never know how it may be useful in the future. Co-workers, supervisors, and even customers are all potential sources of future opportunities. However, these opportunities typically go to the workers who are able to build a positive reputation for reliability, diligence, and effort. Those who work hard are typically noticed even if no one says anything at the time. However, if a worker makes an impression, they may be top-of-mind when other premium employment opportunities are available.