Make the most of your professional advisors

Who's on your team? No, not your sports or reality-show dancing team, your business team, that group of professional advisors who are ready and willing to help you tackle tough financial decisions.

Those decisions can have an effect on your taxes this year as well as in the future, so you want to be sure your advisors know each other - and are working together for your benefit.

As you begin your midyear planning review, here are three areas where coordinating the advice you receive can pay off.

* Investments. Capital gains and losses from sales of your securities affect your taxes, of course, but the kind of investments you make can also have an impact. For instance, buying municipal bonds to generate tax-free interest may result in the unintended outcome of creating income subject to the alternative minimum tax.

* Insurance. The type of health insurance plan you select can have tax implications. An example: A Health Savings Account (HSA), used in conjunction with a high-deductible health plan, can save premium and tax dollars. You fund an HSA with pre-tax cash and take tax-free withdrawals to pay medical expenses.

* Estate planning. Wills, trusts, and beneficiary designations provide the framework for carrying out your wishes after your death. Communication between your tax and legal advisors helps ensure that these documents offer the greatest protection for your heirs while minimizing estate tax consequences.

Taxes and your child's summer job

With the school year over, your teenager might be taking a summer job. If so, you both may have questions about taxes. Here are some of the common concerns.

If your child chooses a typical wage-paying job, he or she will soon be confronted with the task of calculating withholding allowances on Form W-4. Claiming zero allowances and thereby withholding the maximum amount is the safest option, but it might also unnecessarily tie up hard-earned cash until this year's tax return is filed. However, claiming too many allowances, especially if the child holds multiple part-time jobs, might cause underwithholding. For help figuring the right number, try the withholding calculator at www.irs.gov. (Look under "Filing Information for Individuals.")

If your child decides to mow lawns or perform other tasks and be his own boss, there are a few more tax issues to consider. Such activity will likely generate taxable income, on which federal and state income taxes might be due. If net earnings are $400 or more, self-employment taxes will also be owed. These taxes can often be paid at the time that the child files a 2013 tax return, but if the income is substantial enough, estimated tax deposits might be necessary.

Being self-employed also means keeping detailed records of income and business expenses. Encourage your teen to purchase a simple low-cost ledger book to help organize the records. And when tracking income, remind the child that tips received are not just tokens of gratitude - they are considered taxable income by the IRS.

Summer jobs can provide tax breaks for some parents. Business owners can hire their own children and deduct the wages paid to them, effectively shifting income from the parent's higher income bracket to the child's lower bracket. What's more, if operating as a sole proprietor, you do not have to pay FICA taxes if your teen is under age 18 nor pay federal unemployment taxes if the child is under age 21. Just remember, the wages you pay your child must be appropriate for the services actually rendered.

Looking for a little icing on the summer employment cake? When your child receives earned income, he or she can also qualify for a Roth IRA. The lower of $5,500 or the child's annual earned income can be contributed to a Roth by the teen, parent, or someone else.

Summer employment can be your teen's first exposure to the real world. Help them make it a tax-smart experience.

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.