Why Your First Paycheck Is Smaller Than You Calculated
You worked 40 hours at $15/hour, did the math — $600 — and the check says something like $511. Nobody stole from you, but nobody explained it either. Here’s exactly who took what, which parts come back, and the one move most teens never make that’s worth hundreds of dollars.
The two lines that never come back: Social Security and Medicare
Every US paycheck loses 6.2% to Social Security and 1.45% to Medicare — together called FICA. On a $600 check that’s $37.20 + $8.70 = $45.90.
This isn’t a tax you can adjust or refund. It funds current retirees’ benefits and healthcare, and your own eligibility decades from now. Everyone pays it from their very first dollar of wages. Consider it the fixed cover charge for having a job.
The line that probably DOES come back: federal withholding
The "Federal Income Tax" line on your stub is not a bill — it’s an estimate. Your employer guesses what you might owe for the year (based on the W-4 form you filled out on day one) and sends a slice of each check to the IRS in advance.
Here’s what matters for most teens: the federal standard deduction is around $15,000. If your total income for the whole year is under that — true for almost every part-time or summer job — your actual federal income tax bill is $0. Every dollar that was withheld was an overpayment.
Overpayments don’t come back automatically. You have to file a tax return.
The move: file a tax return in January (yes, even as a teenager)
In late January your employer sends you a W-2 form showing what you earned and what was withheld. Filing a federal return with it takes about 20 minutes with free software (IRS Free File, or any of the free tiers of the big tax apps), and for a typical summer-job teen the refund is a few hundred dollars.
Most teens never file, because nobody tells them to — that withheld money just stays with the government. Filing when you’re under the standard deduction isn’t a loophole or a gray area; it’s exactly how the system is designed to work. The refund is your own money coming home.
Check your W-4 so less disappears in the first place
The W-4 you filled out on your first day controls how much gets withheld. If you expect to earn less than the standard deduction for the whole year, the form has a specific option: you can write "Exempt" (following the current form’s instructions), which tells your employer to skip federal income tax withholding entirely.
Only do this if you’re genuinely going to stay under the threshold — and note it doesn’t touch FICA, which comes out no matter what. If you’re not sure you’ll stay under, leave withholding on and collect the refund in the spring instead. That’s the no-risk version.
The unlock nobody mentions: a paycheck opens the Roth IRA door
The best part of your first paycheck isn’t the money — it’s the classification. You now have "earned income," which is the legal key to a Roth IRA (a custodial one if you’re under 18).
Money you put in a Roth as a teenager grows tax-free for 40+ years. Even redirecting one week of summer wages — a few hundred dollars — into a Roth at 16 or 17 is, dollar for dollar, the highest-leverage investing you will ever do in your life, because nothing else will ever have that much time to compound.
Quick answers
Why is my paycheck less than my hourly rate times my hours?
Three deductions: Social Security (6.2%), Medicare (1.45%), and federal (plus possibly state) income tax withholding. The FICA portion is permanent; the income tax withholding is an estimate you can get refunded by filing a return if you earned under the standard deduction.
Do teenagers get all their taxes back?
Teens who earn less than the federal standard deduction (~$15,000/year) owe $0 federal income tax, so all federal income tax withheld comes back as a refund — but only if they file a return. Social Security and Medicare are never refunded.
Do I have to file taxes for a summer job?
If you earned under the standard deduction, you generally aren’t required to file — but you should anyway, because filing is the only way to get your withheld money refunded.
Terms used in this guide
Learn Investing Like a Game
Bite-sized lessons, a $100K practice portfolio, and Mr. Guy to explain anything in plain English.
Create Free AccountFree forever. No credit card needed.
For informational and educational purposes only. Not financial or tax advice. Always consult a qualified professional.