setting some of the earnings aside for a Roth IRA. Teens working summer jobs have a unique opportunity you can't get as an adult: to save for retirement 100% tax free. With a regular IRA, you avoid taxes now but pay them upon withdrawal in retirement. With a Roth, you pay the taxes now, but avoid them upon withdrawal. When you are a teen only making a few thousand dollars, you are below the threshold to pay income taxes today. So any of that money you can put into a Roth will never be taxed. The only catch is you can't put more into a Roth than you earned, so parents can just dump money into a Roth for a 4 year old. But a teen with a summer job does have some reported earnings, so they are eligible to make a Roth contribution.

because they'll never pay lower taxes than they do now. I backdoor my maximum each year. ** Edited by MCL3 Hokie at 6/26/2025, 8:57:55 AM

But teens living at home have a specific opportunity to literally have some retirement income that never was, nor never will be taxed. That's a pretty special magic trick that should be taken advantage of.

...doing a summer job. Double win! Just think what $1,000 will turn into after 50 years... That, and the other Roth contributions she'll make over the years. She will probably be worth multiple millions from her Roth. Add in her 401K later in life (also max out the matching contributions). Get them started early for a successful financial future.

Hopefully, 40+ years of growth on even a modest amount of money will be a big help in her retirement

of a Nigerian prince. He'll show her how short term investments work.

I don’t think she would owe any taxes (under the threshold). If you indicate no withholding on her W2 with employer, you can avoid letting Uncle Sam hold on to her unnecessary withholding and thus avoid having to file a return just to get her refund next year.