Taxes 101 For Preschoolers
April’s most panic-inducing deadline for adults can be the perfect way to teach kids about financial responsibility, according to Scholastic. Kiddie Academy’s VP of Education, Richard Peterson, agrees Tax Day is an opportunity to explain to children what taxes are, why we have them and who benefits from them.
Since even many adults don’t quite understand all of the complexities involved with filing taxes, it can be a difficult concept to teach and help young kids understand. “When speaking with early learners about taxes, try to use examples in context. This will help them to learn how paying taxes relates to them at a young age. That context will change as they get older and begin to pay their own taxes – whether it be sales, income, property or utility tax,” said Peterson.
Every year, working people must file their taxes by a deadline we call Tax Day. The Internal Revenue Service (IRS) collects the taxes, which help pay for things that benefit everybody, including your family.
Peterson offers two teachable moments you can use to help your child understand the concept of taxes. “When a parent is out shopping with their child for food or toys, they can mention that a state sales tax is added to the purchase amount which doesn’t go to the store owners, and instead goes to the state. This extra amount, the tax, goes to fund schools, the police and fire departments, libraries, and many other services which benefit the entire community. When paying bills at home and sending a check in for your mortgage, discuss with your children that in addition to paying the bank for lending you money to purchase your home, you also pay a real estate tax which pays for fixing roads, plowing the snow, trash pick-up, and much more.”
It’s important to explain the basics: taxes are a part of working and people pay income tax on money they earn from their jobs.
No matter how young your child is, tax day can be an important lesson in responsibility. Paying taxes is a civic duty and something your child may have already experienced as a consumer paying sales tax on small toy or snack purchases.
TheMint.org offers a kid-friendly site designed to develop financial literacy in school-age students, including a cash calculator that will tell you how much to save, spent and share based on your monthly income. The Internal Revenue Service also offers a website dedicated to educational content on understanding your taxes.