Use Tax Season as a Learning Opportunity for Your Child

Use Tax Season as a Learning Opportunity for Your Child

As most parents know, there are numerous opportunities to teach kids about money through regular, everyday activities like going to the grocery store or giving them an allowance. Tax season is no different! Explaining taxes to kids might sound too complex, but as you gather your paperwork to file this year, here are a few simple lessons you can impart to your kids along the way.

Taxes keep the town running

One simple definition of taxes that you can share with younger kids is that every day, citizens contribute some of their paychecks to public services like schools, police, firefighters among others. It's the law that everyone “settles up" their tax bill once per year. Some people may get money back they paid too much, others may owe money if they didn’t pay enough over the year. 

Younger children may appreciate the concept that everyone plays a role in the community.

 

For tweens and teens, you can take the lesson a step further by showing them a copy of your W-2 or a past tax return so they can see how your taxes are portioned out to the federal, state, and local government.

Taxes are an important part of “grown-up" finances

Illustrate to your children that keeping track of your finances and staying organized will help make your life easier when it’s time to file your taxes and help ensure that you don't pay more taxes than you should. 

 

Explain how taxes might be different based on how much money people make or the size of their family. For example, you could tell them that parents claim children on taxes because there are benefits that come with that such as tax deductions (to pay less) and the child tax credit to help make life more affordable for families. You might also share that people who earn a lot of money may pay a bit more to help others who are less fortunate.

Older teens can understand more advanced tax concepts

Especially as your teens approach working age, you should start discussing how taxes work and how you get the most out of your tax return. For example, you can mention that one of the benefits of giving to charity (besides helping others) could be that you may be able to claim it on your taxes. The same might go for making contributions to a college fund, or doing energy-saving home improvements (depending on your state). If you do freelance work or own a business, then you can share details about some expenses that you are able to write off.

 

Children and taxes may not sound like they go together, but by introducing it early you help to demystify the process for them in the long run. Equipping them with an understanding of what taxes are and how they will fit into their earning, savings, and spending strategies.

 

Try out GoHenry’s kids debit card with a 30 day free trial and explore Money Missions for a fun way to break down complex financial concepts like taxes, and build crucial money skills from a young age.

 

https://cdn.gohenry.com/blog/authors/1629311305986@0x0.png
Written by GoHenry Published Mar 22, 2022 ● 2 min. read