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Discussion 2 • Understanding Your Paycheck
Should Teenagers Pay Income Taxes?
Take a position first. Then reveal the paycheck mini-lesson and decide whether the numbers change your thinking.
You’re 16 years old, work part-time after school, and earn your own money. Should teenagers have to pay taxes on money they earn? Why or why not?
Mini-Lesson: What Actually Comes Out?
Jordan is 16, earns $15/hour, and works 15 hours per week. Over four weeks, Jordan earns $900 gross pay.
Social Security — 6.2%$55.80Medicare — 1.45%$13.05PA income tax — 3.07%$27.63Total shown here$96.48
That means Jordan sees money withheld during the year even though the final federal income-tax bill may be very different from the amount withheld.
Year-End Reveal
Suppose Jordan earns $10,800 for the year. For a dependent student, the federal standard deduction generally rises with earned income, up to the annual cap. In this example, Jordan’s deduction would be large enough that the $10,800 of wages alone would produce $0 of federal taxable income. Federal income tax withheld could potentially come back as a refund. Social Security and Medicare do not disappear because of the standard deduction.
Suppose Jordan earns $10,800 for the year. For a dependent student, the federal standard deduction generally rises with earned income, up to the annual cap. In this example, Jordan’s deduction would be large enough that the $10,800 of wages alone would produce $0 of federal taxable income. Federal income tax withheld could potentially come back as a refund. Social Security and Medicare do not disappear because of the standard deduction.
Now reconsider: Knowing that paycheck withholding and year-end tax liability are not the same thing, do you keep your original position or change it?
Class discussion
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