Fred Kahn, at age 15, has just formulated his first business plan and faced his first income taxes.
In his first job, as a junior counselor for the summer at the Vacation Village Day Camp near Loch Sheldrake in New York's Catskill mountains, Fred hopes to supplement his official $200 salary with about $400 in tips from the families of his charges. "I am very good to these kids," he says.
And he's not resentful about seeing his first paycheck shrink because of income taxes.
"Actually, it's a feeling of maturity, I guess," the Teaneck, N.J., teen-ager says. "When you're younger, you make money and you spend it. Now, you save some, you pay taxes. It's more grown-up."
As summer once again brings together kids and jobs, many young people and their parents are facing the tax ramifications of adding a wage earner to the family. It's a change that offers all kinds of profitable lessons, experts say -- as long as families avoid some pitfalls.
Parents and money managers both talk about the learning that can come with young people's earliest jobs.
Fred's father, Manhattan accountant David Kahn, says he wouldn't suggest throwing the entire U.S. Tax Code at teen-agers, but it could be a good time to introduce them to a basic tax return.
Several experts cite other lessons that go along with early jobs: the need to be on time, to follow directions cheerfully, even to do a little extra to make an impression.
Others talk about seizing the opportunity for early lessons in careful spending and saving habits. For example, financial planner Charles Hughes says many families ask youngsters to apply part of their summer earnings toward college costs, and use it as a chance to plan for college together.
Kenneth L. Davis, a Manhattan investment manager and father of six, says he advises young people to save 10 percent of their earnings, beginning with the first pay check. That's the best way to develop what should become a lifelong habit, he says.
"Earnings introduce an important sense of independence," says Manhattan financial planner Richard W. Bandfield. "Not having to ask Dad for money or answer what it's going to be used for is an exhilarating experience for a young person."
For most parents, however, the primary tax concern is keeping their tax deduction on the working child.
The Internal Revenue Service says children remain dependents if they are under age 19 (or under 24 if they are full-time students) and parents provide more than half their child's support for the year. Bandfield cautions that "full-time student" means in school at least five calendar months that year.