With Memorial Day weekend here, summer is officially kicking off.

Kids are getting summer jobs, camps are filling up, and families are settling into new summer routines.

But along with the change in schedule comes something many people overlook:

Potential tax planning opportunities.

From teenagers earning their first paycheck to business owners hiring family members, summer can create several ways to improve tax efficiency if you know where to look.

Summer Jobs and W-4 Exemptions

Let’s start with teenagers working summer jobs.

If your child owed no federal income tax in 2025 and does not expect to owe federal income tax in 2026, they may be able to claim an exemption from federal tax withholding on their Form W-4.

What does that mean?

It means federal income taxes may not be withheld from their paycheck during the summer, potentially increasing the amount they bring home each pay period.

Now, it’s important to note:

• Social Security taxes still generally apply 
• Medicare taxes still generally apply 
• State tax rules may differ 

But avoiding unnecessary federal withholding can simplify things for temporary summer income.

Hiring Your Children in a Family Business

For business owners, summer can also create meaningful tax planning opportunities.

If you operate as:

• A sole proprietorship 
• A disregarded single-member LLC 
• Or a husband-and-wife partnership where both spouses are the only partners 

Then wages paid to children under age 18 are generally exempt from:

• Social Security taxes 
• Medicare taxes 

And federal unemployment taxes typically do not apply until the child reaches age 21.

That can create significant payroll tax savings for the family overall.

There are important rules, though:

• The work must be legitimate 
• The compensation must be reasonable 
• The work should be age-appropriate 
• Proper records and payroll documentation are still required 

It’s also important to note this strategy generally does not apply to S corporations or C corporations.

Summer Camps and the Child & Dependent Care Credit

Another commonly overlooked area involves summer day camps.

Many summer day camp expenses may qualify for the Child and Dependent Care Credit if the camp allows parents to work or actively look for work.

Generally:

• Day camps may qualify 
• Overnight camps do not qualify 
• Summer school programs generally do not qualify 

And beginning with 2026 tax returns, this credit may become even more valuable for some families.

Depending on income and family size, the credit could be worth:

• Up to $1,500 for one qualifying child 
• Up to $3,000 for two or more qualifying dependents 

Summer Can Be a Good Time for Planning

What makes these opportunities important is that many families simply don’t realize they exist until after the year is over.

A little proactive planning now can potentially:

• Improve cash flow 
• Reduce taxes 
• And create additional savings opportunities for the family 

Final Thought

Summer brings more than vacations and schedule changes.

It can also create planning opportunities that help families keep more of what they earn.

And as we head into Memorial Day weekend, it’s also a time to pause and remember the men and women who gave their lives in service to our country.

We hope you and your family have a safe and meaningful holiday weekend.