{"id":4341,"date":"2022-10-18T12:36:00","date_gmt":"2022-10-18T19:36:00","guid":{"rendered":"https:\/\/qa.simplifimoney.com\/blog\/?p=4341"},"modified":"2022-10-19T14:13:32","modified_gmt":"2022-10-19T21:13:32","slug":"teach-kids-about-taxes","status":"publish","type":"post","link":"https:\/\/www.quicken.com\/blog\/teach-kids-about-taxes\/","title":{"rendered":"How to Teach Your Kids About Taxes"},"content":{"rendered":"\n

The following is adapted from Smart, Not Spoiled.<\/em><\/p>\n\n\n\n

While it\u2019s true that nothing is certain in life but death and taxes, another truth is that taxes tend to be complicated and inconsistent. For example, in 2017, the \u201cTax Cuts and Jobs Act\u201d was passed, which lowered taxes for families and corporations and stimulated economic growth. However, there\u2019s already talk this year about making major changes to these rates and rules.<\/p>\n\n\n\n

Bottom line: taxes can be confusing. There\u2019s no shame in admitting you don\u2019t know everything about them. But when it comes to educating your children about taxes, it\u2019s important to know and explain the basics. <\/p>\n\n\n\n

If kids get comfortable talking about taxes, they\u2019ll pay closer attention to ever-changing tax laws and make better-informed investment choices when it comes to stocks, real estate, and businesses. They\u2019ll also understand the true cost of everything they earn and buy, and they\u2019ll have more peace of mind come tax time. <\/p>\n\n\n\n

To set them up for success, it\u2019s best to have these conversations early in their lives. This might sound intimidating, but the pointers below can help.<\/p>\n\n\n\n

Get the numbers behind the story. Our survey shows a clear link between early financial education and future income<\/a>.<\/p>\n\n\n\n

Review the basics<\/h2>\n\n\n\n

Even if the details of tax law are over your head, you can still teach kids some dependable basics. For example, they should know that taxes are a part of nearly everything they\u2019ll own, buy, or earn. If they own a property, like a house or an office building, they\u2019ll pay property taxes on it every year, just for owning it. When they earn income from a job or investment, they\u2019ll pay taxes on that too.<\/p>\n\n\n\n

Here\u2019s a fun way to explain taxes to a small child (for you, maybe not for them). Try giving them a bowl of ice cream \u2014 but before you let them dig in, take a bite yourself.<\/p>\n\n\n\n

Call it the parent tax, and explain that because you take care of them, you get a part of their \u201cwealth.\u201d Then explain that while real-life taxes aren\u2019t fun, they\u2019re not punishments. Instead, they\u2019re contributions to public services like education, libraries, and roads.<\/p>\n\n\n\n

Don\u2019t wait for them to be unpleasantly surprised on the day of their first paycheck. Make sure your kids know that when they might someday earn $30 per hour, and work their 80 hours in two weeks, they won\u2019t be getting that full $2,400 deposited in their bank account from that paycheck. They\u2019ll see the net pay after taxes and deductions. <\/p>\n\n\n\n

Encourage them to seek professional advice<\/h2>\n\n\n\n

In addition to being taxed on what they earn, sell, and buy, they may even be taxed when they die, through inheritance tax. Or maybe not! The ever-changing inheritance tax is just one example of why it\u2019s important to stay informed. Tax and estate planning laws constantly shift, depending on who the president is, where you live, and a few other factors. <\/p>\n\n\n\n

If your kids know to keep up with the rules, they can readjust their financial planning and strategies accordingly. While this might sound overwhelming, they can take comfort in knowing that tax planning is typically not a DIY endeavor.<\/p>\n\n\n\n

Because the situation is dynamic and complex, there are tax specialists and professionals throughout the country. Encourage your kids to seek professional guidance from fiduciaries and experts who can guide them in making decisions based on their situation as they grow up. <\/p>\n\n\n\n

Be transparent and thorough<\/h2>\n\n\n\n

One of my philosophies as a fiduciary financial advisor is to err on the side of over-communicating with clients. I break everything down for them, so they\u2019re crystal clear about where they stand and what they need to do. Knowing the full story helps them make better decisions. <\/p>\n\n\n\n

The same can be applied to talking to kids about taxes. Even if you don\u2019t think you have a thorough grasp of tax law, you can be transparent and thorough by offering them specific, real-life examples of taxes in your life.<\/p>\n\n\n\n

Try pulling out an old pay stub to show your kids what gets taken out of each paycheck and why. Explain how much you pay in yearly property taxes. Show them receipts when you go shopping and point out the sales tax added to the bottom.<\/p>\n\n\n\n

Do you wish your family was more open about money? Start with your partner. These ten questions can help.<\/a><\/p>\n\n\n\n

Equip your kids for tax time<\/h2>\n\n\n\n

Taxes may not be fun, but they\u2019re not going away. That\u2019s because they\u2019re an essential part of living in a society with shared resources and public services.<\/p>\n\n\n\n

Like it or not, taxes form an integral part of every capital transaction \u2014 from the medical costs of your birth to estate taxes after you die. <\/p>\n\n\n\n

It\u2019s better to get your kids familiar with the basics of taxation early on. That way they know what to expect, how to plan, and when to ask for help.<\/p>\n","protected":false},"excerpt":{"rendered":"

If you want your kids to grow up money-smart, talk to them about taxes and other personal finance topics. These simple tips can get you started.<\/p>\n","protected":false},"author":45,"featured_media":4343,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_seopress_robots_primary_cat":"none","_seopress_titles_title":"How to Teach Your Kids About Taxes | Quicken","_seopress_titles_desc":" If you want your kids to grow up money-smart, talk to them about taxes and other personal finance topics. These simple tips can get you started.","_seopress_robots_index":"","inline_featured_image":false,"footnotes":""},"categories":[69],"tags":[],"class_list":["post-4341","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-personal-finance"],"acf":[],"jetpack_featured_media_url":"https:\/\/www.quicken.com\/blog\/wp-content\/uploads\/2022\/10\/2-kids-in-suits-surrounded-by-files.jpg","_links":{"self":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts\/4341","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/users\/45"}],"replies":[{"embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/comments?post=4341"}],"version-history":[{"count":5,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts\/4341\/revisions"}],"predecessor-version":[{"id":4351,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts\/4341\/revisions\/4351"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/media\/4343"}],"wp:attachment":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/media?parent=4341"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/categories?post=4341"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/tags?post=4341"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}