Many parents think that teaching their children about taxes is not a parental obligation, but in reality it is. You must explain to your children that, in the United States, if you earn a specific amount of money, you must file income taxes.
Paying Taxes is Not Optional
Children must know that paying taxes is not optional. It is something that all adults earning an income, and even some that receive pensions, disability, or social security, must do.
File on Time
Parents need to stress to their children that they must file their taxes on time. If they are not ready, they can file for an extension without a penalty if the tax return is filed on or before the date of the extension deadline. Filing on time prevents penalties, fines and interest fees.
Take Tax Credits
Tax credits change yearly. It is important for your children to know which credits are the most common and which credits they may qualify for before creating a family, investing and itemizing. Kids need to know that the credits are available for a reason.
Start a 401k Retirement Plan
Stress to your children how important it is to have a 401K retirement plan, and that, yes, it will cost them a little more before retirement in taxes. However, once they reach retirement age, if they follow the stipulations of said retirement plan, they will have more money available each year.
The minute your children start working, start a file for pay stubs in the home for them. Ask them what tax questions they have. If you don’t know the answer, look it up with them and learn something new together.
Image credit: Mike Morrison