Summer Jobs, Lemonade Stands & Roth IRAs: A Cincinnati Parent's Tax Guide
How to handle a teenager's summer W-2, when kids owe tax, and the retirement move that turns a summer job into six figures.
Summer means first jobs, mowing routes, camp counselor W-2s, and — if you're an entrepreneurial family — a Little League concession stand or Etsy shop with your kid's name on it. Handled right, summer income for kids can be almost tax-free AND start a retirement account that's worth six figures by their 30s. Here's the parent's guide.
The basic thresholds for 2026
- A dependent child with only earned income pays no federal income tax until they exceed the standard deduction ($15,000 estimated for 2026).
- Self-employment income (mowing, tutoring, Etsy) triggers self-employment tax at $400 of net profit — even if there's no income tax owed.
- Ohio and Cincinnati municipal income tax kick in at much lower thresholds; check both.
- A dependent child with unearned income (interest, dividends, capital gains) over $2,700 hits the "kiddie tax" at the parents' rate.
The Roth IRA move that changes everything
Any child with earned income can fund a Roth IRA up to the lesser of their earned income or $7,000 in 2026. A 15-year-old earning $4,000 as a lifeguard can contribute $4,000 to a Roth — and it grows tax-free for the next 50 years. At 8% average returns, that single contribution becomes about $180,000 by age 65.
Parents can gift the contribution money (the kid keeps their paycheck). The child just has to have the earned income to justify it.
The lemonade stand and other self-employment quirks
Occasional casual income (one weekend car wash, a bake sale) is usually not taxable and not reported. Recurring or business-like activity (a mowing route, a weekly Etsy shop, a Depop reseller) counts as self-employment. Once net profit tops $400, the child files a Schedule C and pays SE tax even before any income tax.
Hiring your own kid through your business
- If you run an unincorporated sole proprietorship or a spousal partnership, wages paid to your child under 18 are exempt from FICA and FUTA — a real tax savings on both sides.
- S-Corps and C-Corps don't get the FICA exemption, but the wages are still deductible to the business and covered by the child's standard deduction on the way in.
- Wages must be reasonable for actual work performed. Keep a log of hours and duties. Paying a 7-year-old $15,000 to "do social media" doesn't survive an audit.
Ohio and city specifics
Ohio income tax follows federal — a dependent with only a summer W-2 usually owes nothing. Cincinnati and RITA cities do NOT have a standard deduction; every dollar earned in the city is taxable at the local rate (roughly 1.8–2.1%). Employers usually withhold correctly, but if your teen didn't get any city tax taken out on a summer job in a taxing city, they still owe it.
How we help families
Every summer we help Cincinnati parents set up Roth IRAs for their kids, structure legitimate family-business payroll, and file simple dependent returns for a flat, family-friendly fee. If you'd like to turn this summer's income into a real head-start, come see us before school starts back up.
