Sooner or later, everyone starts paying taxes. Taking the time to educate your kids early is a great way to prepare them for the rigors of Tax Day and teach them civic responsibility. But then, you can’t just explain it like you’re talking with an adult. You have to break the concept down into sizable chunks.
What are taxes?
As a first step, your child should understand what taxes are. It may help to describe it as mandatory input for being a citizen in the country, little like household chores. You do them as a contribution to the household to ensure that things run smoothly. You also do chores for your comfort. For example, cleaning your room, so you have space to play.
Where does the money go?
With household chores, your kids already know where the input goes. It makes the house orderly, the dishes clean, and the trash can empty. Taxes are a little more complicated because they go into several departments. Here are a few of them and some ideas on how you can explain it.
Healthcare
Every time they fall ill or break an arm, they need healthcare. You, as a parent, pay for healthcare because you can afford it or because of insurance. For the poor and old, they can’t afford healthcare, and the government often pays for some of their bills using taxes. That way, everyone gets well.
Military spending
Sometimes, children need to protect their toys from bullies who try to take them. Military spending is like building a fort to keep your toys safe. The military buys weapons and intelligence equipment to stay one step ahead and protect the citizens.
Other spending
There are also tax dollars spent on social security, welfare, veterans, transportation, and others. Look for simple ways to describe these to your child.
What happens if we don’t pay taxes?
If you don’t pay taxes, the government can make you pay it by deducting the amount from your account or giving you fines and penalties. Think of it as not doing your chores. You could get grounded, lose screen time, or get even more chores. It’s best to pay your taxes on time and when due.
What’s a tax return?
A tax return is one of the most dreaded annual tasks for most people. Just thinking about filing a tax return makes many people break into cold sweats and panic episodes.
But then, you shouldn’t tell your child any of this. While the possibility remains strong that they’ll grow to share your dislike for Tax Day, you should gently introduce the concept.
It’s helpful if children think of a tax return as a report card you make for the government. You’re telling the government all the grades you got in the past year, with the grades referring to your income.
You can go a step further by introducing your child to tax forms like the 1099 form. Since most people don’t understand these forms, it’s unlikely that your child will, too. However, introducing the concept lays the groundwork for when they actually need to fill it out.
How hard was that?
If you have trouble explaining these tax concepts to your child, it’s probably because you know very little about them. Don’t fret because there are helpful resources to help you. If you’re ready to learn more about the subject, you can begin with Taxfyle’s resource on small business taxes for dummies (https://taxfyle.com/blog/small-business-taxes-for-dummies).
