My daughter's working this summer. It's her first full time job, and it has nothing to do with her future career goals. But, even drudge jobs can represent great potential for students, because this experience tells college personnel that a student can land a job. Further, if that student can hold the job for the entire summer, this persistence shows that a student can make a commitment and stick to it, even if (or especially if) the job has nothing to do with that student's career goals.

School attendance and grades could provide information about a student's character, but school provides a sheltered environment where state and national requirements must be met. Work, on the other hand, can seem pointless to a student. Pointlessness can spell boredom or frustration (what some parents might call "a humbling experience"). Boredom and frustration can lead to problems, including a reason for the student to quit that job about mid-summer.

Quitting a job six weeks before the upcoming school year begins doesn't bode well for students or for parents. First, job opportunities run dry shortly after a school year ends for the summer, so the student may not find further employment. Secondly, if the parents are worried about what that teen is doing during the day (or night), a job at least provides some clue as to where that teen can be located during certain time frames. That job represents a literal GPS locater for teens, so the lack of a job means that GPS is broken. Finally, a college or a future employer might question why that student quit a job mid-summer. Is that student really a quitter?

Parents can provide some backbone for students who don't enjoy their summer jobs. Praising the teen for landing a job in the first place is good - most kids like to hear positive feedback about their choices. Point out all the good things about a job, even if you have to search for them. Look for other reasons to pat those students on the back throughout the summer - this is their first introduction to the work world, and their experiences can shape how they view work in years to come.

My daughter snagged a position at the local burger joint where she wears more than one hat as cashier, fry cook, and window washer. While these activities are far removed from any creative endeavors that she enjoys, she took the job with relief. However, she didn't stop looking for another job and she began to quiz her friends about their summer gigs.

Cora's perspective was altered when she discovered that she was the only one who landed a job where overtime was encouraged, and where she was paid at least the same if not more than her peers during regular work hours. Plus, she knew at least one manager and she was thrilled to discover that she was - initially - the only girl working at this place. If you're the mother of a teenage girl, I don't think I need to explain that particular joy.

Boys aside, the thrill of earning a paycheck for the first time can sustain your teen for at least two weeks. Plus, if your teen sets a goal for summer savings, this perspective can help a teen hold onto a job when all else fails. Cora was somewhat taken aback when she learned about her tax deductions with her first paycheck, but she learned that she might get some of that money back if she files income tax returns next year. This job is teaching my daughter much about life's realities.

But I also learned a few things this summer. First, I learned that my daughter is capable of learning new skills very quickly. This made me wonder why her grades faltered this past quarter at school. Secondly, I learned that my daughter has "gumption," otherwise known as grit and character. Even though she's been to London, Paris, and a few other points on the map (read: somewhat spoiled), she's willing to work at a local burger joint to meet a goal - mainly that of saving some money for college.

Last - but not least - I learned that that IRS was waiting on the sidelines with a new curve in the Kiddie Tax rules. I held my breath while I read information about this change, but I learned that it doesn't affect Cora - at least not at this point with her current earned income. But the IRS now wants more of her unearned income from the previous year.

Under the new Kiddie Tax rules, a dependent child's unearned income (interest from investments) can be taxed at the parent's federal income tax rates instead of at the child's lower rates. If you, as a parent who files that child as a dependent on your taxes, are charged over 30% for your income, that child has to file at the same rate instead of the usual 10% or 5% for long-term gains or dividends.

Before 2006, the Kiddie Tax applied only to dependent children who had not reached age 14 by year-end. So if that child was over age 14, the Kiddie Tax wasn't an issue. The new rule, however, is applied retroactively to the start of 2006 to children who were age 17 or younger by 31 December 2006.

Few parents need to worry about this new tax rule, since it mostly affects children who have become tax shelters for investment gains. If parents have taken advantage of that child's lower income tax rate for their investment gains in the past, the future will send ill winds. Read more about this issue at Smart Money or at the IRS, where you can find Kiddie Tax listed under "Tax Rules for Children and Dependents" [PDF].

Next week I'll talk a bit more about taxes that affect your working teen, along with some information about how your tax setup can either hurt or benefit your dependent child's chances for obtaining college funds.

Until Then,
Linda Goin