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.

The full anatomy of a $480 paycheck

Two things jump out of that table. First, Social Security and Medicare — together called FICA — take 7.65% of every paycheck no matter how little you earn, and that money never comes back at tax time. Second, the federal withholding line is the flexible one: it depends entirely on what you put on your W-4, and for most teens it's the piece you can get refunded. Learning to read these five lines now means you'll never be confused by a pay stub again — including the much bigger ones later.

The W-4: the form that decides your withholding

On day one, HR hands you a W-4 form, and most teens fill it out randomly. Here's what it actually does: it tells your employer how much federal income tax to hold back from each check. If you expect to earn less than the standard deduction for the year ($14,600 in 2024) and you had no tax liability last year, you can legally write 'Exempt' below line 4(c), and your employer will stop withholding federal income tax entirely. Your checks get bigger immediately, and there's no refund to chase in April.

The catch: exempt status is a promise that you'll owe nothing. If your summer job turns into a 30-hour-a-week school-year job and you blow past the threshold, you could owe tax in April. The safe play for most teens is the default: fill out the W-4 as single with no adjustments, let a small amount be withheld, and file a return in the spring to get it back. Think of it as a forced savings account with a one-year delay — annoying, but harmless. And whichever route you choose, keep every pay stub until you've checked your first W-2 against them in January. Payroll errors are rare, but you are the only person who will ever catch one.

1. 1
   Open the accounts before the first shift

   A checking account with a debit card plus a savings account, at a credit union or online bank with zero monthly fees. Bring a parent if you're under 18.

2. 2
   Set up direct deposit on day one

   Give HR your account and routing numbers. Paper checks get lost, delayed, and cashed at fee-charging counters.

3. 3
   Split the deposit automatically

   Most employers let you send a percentage to each account. Try 80% checking, 20% savings — money you never see is money you never miss.

4. 4
   Check your first pay stub line by line

   Confirm hours, rate, and deductions against the table above. Ask your manager about anything that doesn't match — errors favor whoever notices.

5. 5
   Calendar January 31

   That's the deadline for your W-2 to arrive. File a free return in February and collect the refund most teens abandon.

Common first-paycheck mistakes

• Spending the first check the day it lands. The first paycheck sets your pattern; a 20% automatic savings split from check one becomes invisible within a month.
• Cashing paper checks at check-cashing stores, which take 1-3% of your money for nothing a free bank account doesn't do.
• Ignoring the pay stub for months, then discovering you've been paid for 35 hours when you worked 40. Verify every check for the first month, then spot-check.
• Forgetting that tips and cash wages are still taxable income — restaurants report them, and so should you.
• Not asking about a 401(k). Most part-time teen jobs don't offer one, but some big retailers do, sometimes with a match. Free money is free money at any age.

A note for parents reading over a shoulder: the highest-value thing you can do with a teen's first paycheck is narrate your own. Pull up your pay stub next to theirs and walk both, line by line — here's my gross, here's my 401(k) contribution, here's why my health insurance line exists and yours doesn't yet. Teens who have seen a real adult paycheck dissected treat their own deductions as normal machinery instead of theft, and the conversation plants the vocabulary — pre-tax, match, withholding — that makes every future benefits enrollment less bewildering. Fifteen minutes at the kitchen table, once.

Your first paycheck is small, but the systems you attach to it are not. Direct deposit, an automatic savings split, a correctly filled W-4, and a February tax-filing habit — set those up at 16 and every raise for the rest of your life gets processed by good machinery instead of good intentions.