A Step Toward Adulthood: An After-School Job

by Savannah Ziegelbauer

As a Gen Y-er, you're faced with more expectations and pressure to achieve than ever before. While holding a part-time job means more opportunities to socialize and to spend cash, it's one more thing you have to balance among school, sports, and friends.

Whether you'll be bagging groceries, waiting on tables, or working in retail, the government is going to collect taxes from your wages. Welcome to the working world. And don't forget—you're also expected to keep up on your studies and outside activities if you want to get into college.

That's why it's important that you're aware of the trade-off between having a job and having time for studies and extracurricular activities. With planning, you can find a happy medium between the two.

How do income taxes work?

Uncle Sam collects taxes on every worker's paycheck. Rather than collecting a lump sum of taxes at the end of each year, the government takes a portion of every paycheck you receive. The government prefers this pay-as-you-earn form of taxation because it needs to maintain a steady stream of income while also drawing interest on your tax dollars.

Your first task on the job is going to be filling out a W-4. This is a tax form the IRS (Internal Revenue Service) uses to determine how much tax to withhold from your wages. Your job is to specify exactly how much income tax you want taken out of each paycheck--how much tax you want withheld. Basically, you're estimating how much money you'll owe the government for taxes at the end of the year.

For each deduction you take, the amount of money the government takes out of each paycheck is reduced, reducing any tax refund you might be eligible for at the end of the year. Each time you get paid, you'll see the amount of tax withholding indicated on your paycheck stub, also called your earnings statement.

How do you know if you have to file an income tax return?

Each year, by Jan. 31, your employer must send you a W-2 that reports exactly how much money you made over the past year and how much of that was withheld for taxes. This form has most of the information you'll need to file your income tax returns.

The IRS says you must file a return if any of the following apply:

• Your unearned income was more than $800 (numbers are for tax year 2005). That means if you have a credit union or mutual fund account in your name and you made $800 in investment income, you must file.

• Your earned income was more than $5,000. This includes babysitting, odd jobs, and mowing lawns.

• Your gross income is more than whichever is larger--$800 or your earned income (up to $4,750) plus $250.This applies when you collect both unearned income and wages. For example, Jack received $325 of dividend income from his credit union savings account and he made $600 mowing lawns. His gross income is $925. His earned income plus $250 is $850. His gross income of $925 is more than his earned income of $850, so he must file a return.
  
  Valuable skills such as time management, the ability to cooperate with others, and commitment are learned and reinforced.

Even if you legally don't have to file income taxes at the end of the year, it may be beneficial to do so anyway. Did you work part time and earn only a small amount, but federal taxes still were taken out? Then you're probably due a refund and only can get one by filing a return.

You may not have to have any taxes withheld if you didn't have a tax liability from the previous year, and you don't expect to owe any taxes for the current year based on your total expected income. But remember, the government still collects money from your paycheck for Social Security, otherwise known as FICA (Social Security and Medicare).

How can you balance school and work?

In between school, work, volunteering, extracurriculars, and sports it may seem as though there are not enough hours in the day to get everything done.

Mark Boggie, a Buena High School counselor, Sierra Mist, Ariz., recommends not allowing an after-school job to interfere with school work and studying because school is the most important part of a teenager's life.

"The trouble starts when the boss makes the student feel obligated to work a lot of hours and almost guilty for studying instead of coming into work," Boggie says. "When that happens, it's the job of the parents to step in and control how many hours the teen should be working."

Be aware of the pros and cons of having an after-school job:

Pros:

• You are a member of the adult working world, which allows you to establish contacts with potential future employers.
• You'll learn and reinforce valuable skills such as time management, the ability to cooperate with others, and commitment.
• You have extra spending cash in your pocket and can start saving for college. Susan Shelly's book, "Complete Idiots Guide to Money for Teens," is a great place to start learning about how to budget your money so you're not spending it on frivolous things.
• There will be one more thing you can include on your college admissions application. More and more colleges are looking for applicants with work experience. They figure if you've held a job, you've gained skills that you will need for college.
  
  

Cons:

• You may have less time for homework and other after-school commitments.
  Rather than collect a lump sum of taxes at the end of each year, the government takes a portion of every paycheck.
• If you're not working at your "dream" job, you may find work boring.
• Time spent on the job means less time spent exercising, with your family, or volunteering.
• If you work long hours you'll get less sleep and feel more emotional stress.

Be sure to keep in mind the most important job for a teenager is being a student. "The working student needs to be the one responsible for setting aside study time," says Boggie. "It's part of growing up."

Savannah Ziegelbauer is a college student—majoring in journalism and political science— who has learned to balance work, other commitments, and school very well.

Published October 30, 2006

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