Spoiler alert: A part-time job could mean tax-free income, early retirement savings, and a smarter financial future for your child—if you know how to play your cards right.
Chapter 1: The Ice Cream Stand That Teaches Taxes
Every summer, kids rush into the world of work—scooping ice cream, babysitting, mowing lawns, or running lemonade stands. But what if those humble beginnings did more than fill piggy banks? What if they launched your child’s financial future with savvy tax moves and smart savings?
At JS Morlu, we see summer jobs not just as resume builders, but as golden opportunities for tax-free income, early retirement planning, and yes—family business strategy.
Chapter 2: $15,000 Tax-Free? Yes, Please.
Thanks to the IRS, the standard deduction for 2025 is $15,000 for single filers. Translation? Your child can earn up to that amount completely tax-free. No income tax. Nada. Zilch.
Now add this gem: kids with earned income can contribute to an IRA—either Traditional or Roth—up to $7,000 (or their total earned income, whichever is lower).
Here’s the magic math:
- Earn $15,000 from a summer job
- Contribute $7,000 to a Traditional IRA
- Result: $22,000 of total income, zero taxable dollars
But there’s a twist. While a Traditional IRA offers immediate tax deductions, a Roth IRA grows tax-free—and that’s rocket fuel for young savers. The catch? Roth contributions aren’t deductible.
No problem. If your child hesitates to part with their paycheck, consider gifting them the IRA contribution yourself. You’re not just helping them—you’re investing in their future.
Chapter 3: The Ultimate Summer Gig Guide (and Tax Implications)
Let’s break down popular teen jobs and how Uncle Sam treats their earnings:
- Fast Food Crew: W-2 issued, income and FICA taxes withheld.
- Babysitting: No W-2, but income is still reportable.
- Lawn Care: Solo = self-employed, Company = W-2. Either way, keep records.
- Lifeguard: W-2 provided. Also, a life-saving resume builder.
- Pet Sitting/Dog Walking: Usually self-employed, track income.
- Craft Sales: Hobby? Report gross income. Business? Deduct materials.
- Online Tutoring: Track earnings, especially if income exceeds $15K.
- Social Media Management: Employed = W-2, Freelance = Self-report.
- App/Game Dev: Whether a side hustle or budding business, keep receipts and logs.
In all these scenarios, if earnings exceed the standard deduction, taxes kick in. But if not? You’ve just gifted your child an income stream and a tax-sheltered start.
Chapter 4: Hire Your Kids, Save Big—Legally
Now, here’s where things get even juicier for business owners.
Let’s say you run a small business. Instead of hiring temporary help during the summer, you hire your child. Boom: you shift income from your higher tax bracket to their zero bracket.
Example: You pay your child $16,000.
- You deduct it as a business expense → save $3,840 (if you’re in the 24% tax bracket).
- Your child’s taxable income? Just $1,000, taxed at 10% = $100.
But wait, there’s more:
- If your business is unincorporated and your child is under 18, you both skip FICA taxes (no Social Security or Medicare).
- Under 21? No FUTA (federal unemployment tax) either.
That’s not just money saved—that’s generational wealth engineering.
Chapter 5: The Retirement Account That Multiplies
Let’s go back to that $7,000 IRA. Assume a 10% return over time. Starting at age 15, by the time your child hits 65, that one summer’s Roth IRA contribution could grow to over $500,000. That’s one powerful scoop of ice cream.
Chapter 6: Why This Matters—Beyond the Dollars
Summer jobs aren’t just about the paycheck. They offer:
- Real-world skills: Communication, time management, problem-solving
- Financial literacy: Budgeting, saving, understanding taxes
- Work ethic: Respect for money and effort
- Confidence & independence
- Tax education: Their first paycheck = their first tax lesson
Chapter 7: Let’s Strategize Your Child’s Summer
Whether your teen is mowing lawns or managing social media accounts, JS Morlu is here to help you navigate every tax form, deduction, and growth opportunity. From setting up Roth IRAs to integrating your kids into your business payroll, we’ve got the strategy.
Need help hiring your child into your business or setting up a tax-free retirement plan for them?
📞 Contact JS Morlu today for a free consultation.
