Why Summer Jobs Are a Smart Move—for Kids and Their Parents

Summer isn’t just for beach days and backyard barbecues—it’s the perfect season for teens and young adults to land their first job, start earning money, and learn what it means to be financially responsible. And if you’re a small business owner or contractor, especially in service-based industries like roofing, fitness, events, or beauty, summer is also the perfect time to fold your child into your business in a way that benefits both of you.

Let’s break it down—without the accounting jargon.

The Real Value of Summer Jobs

A summer job can do more than just fill up a teen’s wallet. It builds confidence, maturity, and habits that will serve them well into adulthood:

Real-Life Skills: From customer service to time management, these early roles teach responsibility.
Money Smarts: Kids learn how to manage a paycheck, set goals, and understand taxes (yes, even the dreaded W-2).
A Confidence Boost: Nothing builds self-worth like earning your own money—and deciding what to do with it.

What’s New for 2025: A Tax Win for Teens

For 2025, the standard deduction for single filers is $15,000, up from $14,600 in 2024. That means your teen can earn up to $15,000 in summer income without owing federal income tax.

But here’s where it gets strategic: if your teen contributes up to $7,000 to a Roth or Traditional IRA, they’re setting themselves up for long-term growth. At Freedom Line, we typically recommend a Roth IRA for young earners. They won’t get a deduction now, but the decades of tax-free growth ahead? Totally worth it.

Tip: If your teen isn’t eager to save, you can fund the IRA as a gift. The only requirement is that they have earned income.

Common Summer Jobs—and What to Know for Taxes

Whether your child works for someone else or for themselves, here’s what to keep in mind:

Fast Food & Retail: W-2 income, often with tips—remind them to track tip income for tax reporting.
Babysitting & Nannying: Paid in cash? Keep good records. If they earn more than $400, self-employment taxes may apply.
Lawn Care & Odd Jobs: If they freelance, this is self-employment. If they’re on a company payroll, expect a W-2.
Lifeguarding: Great for athletic kids—W-2 job with required certifications.
Dog Walking or Pet Sitting: Self-employment income—track everything.
Art, Crafts & Reselling: If they turn a hobby into sales, this may be considered taxable business income.
Online Services (Tutoring, Social Media, Gaming): Often 1099 or cash payments. Treat this like self-employment and keep records.

Thinking of Hiring Your Child? Here's Why You Should

If you own a sole proprietorship, LLC, or S-Corp in Texas, hiring your child can be a brilliant tax-saving move—as long as the job and the pay are legitimate.

Here’s how it benefits both of you:

Lower Your Taxable Income: Wages paid to your child shift earnings to someone likely in a lower tax bracket.
FICA/FUTA Exemption: If your child is under 18 and you’re an unincorporated business, no Social Security or Medicare taxes are owed. Under 21? No FUTA tax either.
Real Work, Real Pay: Think admin support, marketing help, event setup, or tech tasks.

Example: Sarah runs a mobile fitness business. She pays her 16-year-old daughter $16,000 to handle scheduling and content creation. Sarah reduces her self-employment tax by over $3,800. Her daughter owes little to no income tax and can contribute to a Roth IRA. Win-win.

Start Their Retirement Journey Now

If your teen earns at least $7,000, consider opening a Roth IRA in their name. That money could grow for 40+ years, compounding tax-free. It’s the kind of early move that turns summer jobs into long-term financial freedom.

What Should You Be Doing Now?

Talk to Your Child: Encourage them to explore work options that align with their interests.
Keep Records: Especially for cash jobs, freelancing, or side gigs.
Open a Bank Account: Set up direct deposit, and talk about savings vs. spending.
If You’re a Business Owner: Let’s talk about hiring your child the right way—legally, ethically, and strategically.

Final Takeaways

Summer jobs give kids more than spending money—they provide real-world experience and a launchpad for financial independence. And when done right, they can also reduce your family’s tax burden.

At Freedom Line Accounting & Tax, we help service-based business owners and parents use smart tax strategies to strengthen both the business and the household.

Ready to talk strategy? Book your complimentary consultation and let’s explore how your summer plans can work harder for your family’s future.

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