Key sections to understand:

Gross Pay – The total amount you earned before any deductions (your hourly rate × hours worked)

Federal Income Tax – Money withheld for federal taxes (based on your W-4 form)

FICA Taxes – This includes Social Security (6.2%) and Medicare (1.45%) taxes that everyone pays

North Carolina State Income Tax – NC has a flat tax rate of 4.5% on all income

Net Pay – Your actual take-home pay after all deductions (this is what gets deposited or appears on your check)

Important tip: Keep all your pay stubs! You'll need them to verify your W-2 form at tax time and to resolve any payment disputes.

Federal Taxes: If you earn less than $14,600 (2025 standard deduction), you're generally not required to file a federal tax return...but you should still file if taxes were withheld from your paychecks -- you'll likely get a refund!

North Carolina State Taxes: NC requires you to file a state return if your gross income exceeds $13,750 (single filer for 2025), but like federal taxes, you should file even if you earn less if taxes were withheld—you may get a refund! North Carolina doesn't have local or city income taxes, so you only need to worry about filing state and federal tax returns.

What you'll need:

• Your W-2 form from your employer (arrives by January 31st)
• Any 1099 forms if you did freelance/gig work
• Records of tips if you work in food service
• Your federal return information (you'll need to file federal before state)

Filing your taxes:

• IRS Free File – Free federal filing for those earning under $89,000
• NC Free File – North Carolina offers free electronic filing through the NC Department of Revenue
• VITA (Volunteer Income Tax Assistance) – Free tax help at community centers throughout NC

*Many teens can file both federal and state returns online in under an hour 

Federal W-4: When you start a job, you'll fill out a W-4 for federal withholding. As a teen with one job, you'll typically:

• Claim yourself as single
• Check the box if someone else (like your parents) claims you as a dependent
• Leave most sections blank for the simplest withholding

NC Form NC-4: You'll also complete North Carolina's withholding form (NC-4). This determines how much state tax is withheld from your paycheck. For most teens, the standard allowances work fine.

North Carolina Specific:

• NC Department of Revenue - tax guides and e-filing resources
• NC-4 Employee's Withholding Allowance Certificate – Available at ncdor.gov
• NC Free File Alliance – Free state tax filing options
• NC VITA Sites – free, IRS-certified tax preparation for low-to-moderate income individuals, persons with disabilities, and limited English speakers. Find locations at ncdor.gov or here. Individual can also call 1-877-252-3052.

Federal Government Resources:

• Tax information for students – Tax basics specifically for young workers
• IRS Free File (irs.gov/freefile) – Free federal tax filing software
• Understanding Your Form W-2 

Educational Sites:

• Khan Academy – Free lessons on taxes and personal finance
• 360 Degrees of Financial Literacy (AICPA) – Teen money management resources
• Junior Achievement – Financial literacy programs and resources
• Practical Money Skills – Interactive tools for understanding paychecks

Mobile Apps:

• Paycheck Calculator apps – Make sure to select North Carolina to see the 4.5% state tax
• IRS2Go – Official IRS app for checking federal refund status

Federal and NC State Returns Due: April 15th (same deadline for both)

W-2 Forms Arrive: By January 31 each year

Extension Available: You can request an extension to October 15th, but any taxes owed are still due April 15th

Tips

• Set up direct deposit so you don't lose paper checks.

• Create a simple folder (physical or digital) for all pay stubs and tax documents.

• Remember: you need to file BOTH federal and NC state returns if you meet the income thresholds.

• If your parents claim you as a dependent, their tax situation doesn't affect your requirement to file your own returns for your income.

• Summer job? You still pay federal and NC state taxes, even if it's temporary work.

• Got a refund? Consider saving it or using it to start an emergency fund!

• NC doesn't tax Social Security benefits, but as a teen worker, this won't affect you yet  

Common Mistakes

• Not filing a state return when they should (and missing out on NC refunds)
• Throwing away paystubs before tax season
• Filing federal taxes but forgetting to file NC state taxes
• Not updating their W-4 and NC-4 when they get a second job
• Forgetting to report cash tips on both federal and state returns
• Not keeping records of work-related expenses if self-employed 

If you earn $500 in a paycheck:

• Federal income tax: varies based on your W-4 (could be $0-$50+)
• Social Security: $31 (6.2%)
• Medicare: $7.25 (1.45%)
• NC State tax: $22.50 (4.5%)
• Approximate take-home: $389-$439 (depending on federal withholding)
• Understanding your paycheck now builds financial literacy that'll benefit you for life. Don't hesitate to ask your parents, school counselor, or employer's HR department if you have questions! 

Sample Paystub

Paystub Terms