Taxes apply to children's summer jobs

If your child takes a job this summer, you'll want to know about the following tax issues.

For 2013, your child can earn as much as $6,100 and not pay a dime in federal income taxes. If your child's earnings won't exceed this amount, consider having the child claim "student - exempt" when completing the federal withholding allowance certificate (Form W-4). If this is the child's only income and the total is below the $6,100 limit, he or she then won't have to file a 2013 tax return.

If the child makes a maximum deductible traditional IRA contribution for 2013 ($5,500), he or she can earn as much as $11,600 without incurring any federal income tax. If your child earns over $400 of self-employment income, the filing requirements change.

There will still be withholding from your child's paycheck for social security and Medicare taxes. But those payments are not income taxes, and they cannot be refunded to the child.

As long as you provide more than half of your child's support, you can continue to claim the child as an exemption on your tax return. Your child will lose his or her exemption, but that exemption deduction is typically more valuable to you than to your child.

If you own your own business, consider hiring your child this summer. Your business can deduct the wages you pay the child, as long as the wages are appropriate for the work performed. If your business is a sole proprietorship or family partnership, you are not required to withhold social security or Medicare taxes on your child's wages if he or she is under 18 years of age.