Irs Form W4

5 summer tax tips for working teens

By Nancy R. Mandell

University of Massachusetts junior Evan Resnick was thrilled to get a paid summer internship at a medium-sized technology firm on the outskirts of Boston. The 20-year-old computer-science major, who lives in nearby Needham, Massachusetts, is fully aware that the competition for internships — often unpaid — and even summer jobs in the retail and food-service sectors, is fierce. This summer, the number of high school and college students with an internship is expected to outpace the 960,000 who found summer employment last year.

But with a job comes paperwork — IRS forms W4 and W9 that determine how much, if any, of earnings will be withheld as well as an often overlooked but unique opportunity to start lifetime retirement savings with a double tax advantage.

Gina Chironis, a personal financial specialist who is CEO of Clarity Wealth Management in Irvine, California, puts it this way: “Most kids don’t have a clue that if they earn only up to $5,800, they can elect not to have income taxes withheld at all, avoiding the need to file a 1040 next year to in order to recover any refunds due.” The IRS set $5,800 as the standard deduction for a single filer in 2011.

Chironis, a non-practicing CPA who is still seeing the youngest of her four children (ages 17 to 24) through the summer paperwork jungle, insists it is up to parents and their advisers, if necessary, to take responsibility for understanding the consequences of signing on the appropriate line. Without adequate preparation and proper guidance, student workers may lose advantages and savings privileges to which they are entitled.

Time to call in a CPA? Not necessarily. Professional groups like the California Society of Certified Public Accountants offer personal and website guidance designed to understand available tax benefits. Evan was fortunate that his employer emailed him the W4, often a bit baffling to first-time employees, particularly when completing it under pressure in the waiting area of an HR department. (Prospective employees can always ask to take the form home.)

Chose exemptions carefully. The hardest question is the most crucial: how many tax exemptions will you claim? IRS guidelines provided as a worksheet on the first page of the W4 usually work out to only one — the self exemption — or zero for teenagers who generally have no spouse or dependents to claim.

5 summer tax tips for working teens | Reuters Wealth

By Nancy R. Mandell

University of Massachusetts junior Evan Resnick was thrilled to get a paid summer internship at a medium-sized technology firm on the outskirts of Boston. The 20-year-old computer-science major, who lives in nearby Needham, Massachusetts, is fully aware that the competition for internships — often unpaid — and even summer jobs in the retail and food-service sectors, is fierce. This summer, the number of high school and college students with an internship is expected to outpace the 960,000 who found summer employment last year.

But with a job comes paperwork — IRS forms W4 and W9 that determine how much, if any, of earnings will be withheld as well as an often overlooked but unique opportunity to start lifetime retirement savings with a double tax advantage.

Gina Chironis, a personal financial specialist who is CEO of Clarity Wealth Management in Irvine, California, puts it this way: “Most kids don’t have a clue that if they earn only up to $5,800, they can elect not to have income taxes withheld at all, avoiding the need to file a 1040 next year to in order to recover any refunds due.” The IRS set $5,800 as the standard deduction for a single filer in 2011.

Chironis, a non-practicing CPA who is still seeing the youngest of her four children (ages 17 to 24) through the summer paperwork jungle, insists it is up to parents and their advisers, if necessary, to take responsibility for understanding the consequences of signing on the appropriate line. Without adequate preparation and proper guidance, student workers may lose advantages and savings privileges to which they are entitled.

Time to call in a CPA? Not necessarily. Professional groups like the California Society of Certified Public Accountants offer personal and website guidance designed to understand available tax benefits. Evan was fortunate that his employer emailed him the W4, often a bit baffling to first-time employees, particularly when completing it under pressure in the waiting area of an HR department. (Prospective employees can always ask to take the form home.)

Chose exemptions carefully. The hardest question is the most crucial: how many tax exemptions will you claim? IRS guidelines provided as a worksheet on the first page of the W4 usually work out to only one — the self exemption — or zero for teenagers who generally have no spouse or dependents to claim.

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