There's No Summer Break From Taxes

And you thought you could have the summer off with no tax issues to think about? Fuhgeddaboudit.

In many cases, however, some summertime moves could land you some welcome tax breaks.

For example, working teenagers or college students should be careful how they fill out their W-4 forms for their summer jobs to avoid having too much tax withheld. No point in their giving money to the government when they could use it now.

Here's the deal. You may be exempt from tax withholding if you meet all of the following criteria: you can be claimed as a dependent (usually on a parent's return), your total 2006 income will not be more than $5,150, unearned income (interest, dividends, etc.) will not exceed $300, and you had no income tax owed for 2005, according to Internal Revenue Service spokesman Jim Dupree.

"This is the time to be mindful of your child's tax situation and fix it so taxes aren't taken out," Dupree said.

To claim exemption from withholding, you generally would need to have had no tax liability the previous year and expect none this year.

However -- isn't there always one with the IRS? -- your child will still have to pay Social Security and Medicare taxes.

To make sure your children don't have unnecessary taxes withheld, have them her read the W-4 carefully before filling it out. Actually, it's better to sit down with your children before they start work to go over how to fill out the form. Go to http://www.irs.gov . Then search for Form W-4, "Employee's Withholding Allowance Certificate." You will see that if your child is exempt, only lines 1, 2, 3, 4 and 7 need to be filled out.

This may be a good time to also have a conversation about reporting all taxable income. If your child earns tips in a summer job, those tips are taxable and must be reported.

(If you're getting married this summer, you may want to fill out a new W-4 form. That change in your marital status could mean more money in your paycheck.)

Don't forget that if you send your child or children (under age 13) to summer camp, the cost may count as an expense toward the Child and Dependent Care Credit.

You can claim the credit if you have to put your children in summer camp programs so that you (and your spouse if filing a joint return) can go to work or look for work. This is no different from when you pay for child care during the school year so you can work -- doesn't matter if the kid is having more fun in the summer. Your fun is getting the tax benefit if you qualify.