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Summer jobs: A window into wages, taxes, and cost of living

May 21, 2014

Every summer, millions of high school students just like you hit the streets looking for work – in restaurants, malls and offices.

This year, it might be a little easier to find a job since the unemployment rate has dropped below 7 percent. This means that fewer people are looking for jobs than there were last year, increasing the chances of you finding one.

Once you have a summer job, it’s time to start raking it in. You might be saving for a car or for college, helping the family, or just looking for extra spending money, If you are seeking experience for future career opportunities, internships can help you.

When the first paycheck arrives, you might be in for a shock – it’s less than you expected! A huge chunk is missing, but don’t look to your boss to find it.

That gap between what you thought you would get paid and what you actually get paid is money that goes to the government. It’s your income tax, which is basically your contribution to keep the government running and its public services – such as roads, parks, public health and the military – available.

The amount that the federal, state and local governments take out of your paycheck is based on how much money you make. The more you earn, the higher the percentage of your wages you pay in taxes, from 10 percent for the lowest income bracket to 35 percent for the highest bracket. The amount also varies depending on whether you are single or married, have children (or other “dependents” whom you care for), or are over the age of 65.

If you’re getting a paycheck for the first time, a quick glance at your pay stub – a form attached to the check – will tell you where all the money goes. You’ll see one amount listed under “gross pay”; that’s the amount that you get paid before taxes get taken out. You’ll see another amount listed under “net pay”; that’s the amount you’re actually getting after taxes.

In between, you might see other items listed, and corresponding dollar amounts. This is the money that’s been taken out of your pay – the technical term is “withholdings” – and the pay stub is there to give you a dollar-by-dollar breakdown of what was deducted. You’ll see your federal tax, your state tax and your local / municipal tax high up. Then, if you are earning more money, you’ll see other withholdings such as Social Security – it might be labeled something like SST or FICA. This is a retirement benefit you receive from the government: Throughout your working life, the government takes money from each paycheck, so you’ll have savings when you retire. Basically, it’s money you get back, but not until much later in life. Likewise, the money that goes to your Medicare withholding comes back to you, but in the form of government health care when you’re a senior citizen and no longer working.

Confused? You aren’t alone! Many citizens seek out the help of tax professionals every year to help them fill out their tax forms. For more information on how the federal tax process works, check out the Internal Revenue Service website at www.irs.gov. And happy summer vacation!

What do you think?

Do you have a summer job or are you trying to get one? What kind of work would be your optimal summer job? How will taxes and other withholdings affect you now and in the future? Join the discussion and let us know what you think!
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Comments
10/12/2014
Sidney, Montana
Tate
Mr. Faulhaber/ Sidney High School
Here is the situation, I live in the Bakken Oilfield in Montana. So I have a summer job and what I am currently doing is roustabout work. It includes maintenance on well sites and constructing brand new well sites. I get a lot of money taken out of my paychecks. I fell though that it is right because that is how it has been for a long time and why change it now. The withholdings will affect my future because they might help me when I am older, like with social security and such. The money that does get taken out will also help with the roads and maintenance of everyday things in the state of Montana.

9/30/2014
Murrieta CA
ed
Mr. Jabro creekside high school
I currently dont have a summer job but I do have an internship at a local shop. I'm trying to get a summer job because i need some money for gas and clothes. My optimal summer job would be a cashier for a fast food chain or a mechanic. Well taxes will help me by giving to my future and retirement funds and it'll help the community.

6/15/2014
Stroudsburg, PA
Grace
Mr. Hanna/ Stroudsburg Junior high school
I am looking for a summer job, preferably as a lifegaurd or a babysitter. Taxes will effect me by taking money out of my paycheck. Later on, that same money will effect me positively, like when I retire or go on disability, because the social security money will get paid back to me.

6/15/2014
Stroudsburg, PA
Grace
Mr. Hanna/ Stroudsburg Junior high school
I am looking for a summer job, preferably as a lifegaurd or a babysitter. Taxes will effect me by taking money out of my paycheck. Later on, that same money will effect me positively, like when I retire or go on disability, because the social security money will get paid back to me.

6/12/2014
Stroudsburg, PA
Shecquanna
Mr. Hanna/ Stroudsburg JHS
No I do not have a summer job and no I am not planning on getting one but if I was to get a summer job it would most likely be something like working in a clothing store or a waitress or even babysitting. Now taxes would affect me badly because I would be working so hard for barely anything. My paycheck would be so small it probably wouldn't even be worth it. In the future I think taxes would affect me in a positive way when I retire.

6/12/2014
stroudsburg PA
Jasmine D
Mr.Hanna/stroudsburg JHS
I'm trying to get a summer job, but anywhere I go there is a certain age I must be. To work at a summer camp. Well it would affect me now because I would get paid probably less money than other workers, because I'm young.

6/12/2014
Stroudsburg, PA
Madeline R.
Mr.Hanna/stroudsburg JHS
I would love to have a summer job some extra money to make me feel like I am providing for myself. But I will find it a great disappointment when I look at my paycheck and find automatic money already taken from me. A feeling of responsibility will be to find out where all this money goes and if a get a raise how much more will be taken. Taxes and things involving the government seem like grown up things to worry about. And having a summer job makes you feel like a grown up

5/22/2014
Washington, NJ
Dustin
Mrs. Rokosny
Over the summer I will hopefully have a job at a local business. Currently I am looking for a summer job that will pay good. I would prefer a job for some franchise, but I will settle for aything. Although Income tax and other various things that limit your pay seem tedious, they are beneficial to you in our future. For example, the income tax will help me in my social security in the future. The money does not just go away but rather comes back and helps in the future. Paying tax is important and will ultimately benefit you in the end.

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