A teen's first job and paycheck

Your first paycheck is a rite of passage — and also a brutal math lesson. You worked 40 hours at $12/hour. You expected $480. You got $397. Welcome to taxes. Understanding what happened to the missing $83 is more important than most things you'll learn in high school.

Reading your pay stub

• Gross pay — the full amount you earned before anything is taken out. This is the number you calculated in your head.
• Federal income tax withholding — the IRS takes a percentage based on what you filled out on your W-4 form. For most teens earning under $14,600/year, you'll get most or all of this back when you file taxes.
• Social Security (6.2%) — funds retirement benefits. Yes, you're paying into it at 16. No, you can't opt out.
• Medicare (1.45%) — funds healthcare for people over 65. Also not optional.
• State income tax — varies by state. Some states (Texas, Florida, Nevada, etc.) charge zero. Others take 3–10%.

Setting up your first bank account

Most banks require a parent as co-owner on accounts for anyone under 18. That's fine — the goal is to get direct deposit set up so you're not cashing paper checks. Open a checking account for spending and a savings account for goals. Avoid any account with monthly maintenance fees. Credit unions are often better than big banks for young people because they have lower minimums and fewer fees.

One more thing: file your taxes, even if you don't owe anything. If your employer withheld federal income tax and you earned under the standard deduction ($14,600 in 2024), you'll get all of that withholding back as a refund. Free money for 20 minutes of work on a free tax filing site.