Tips for Teaching Your Preschooler About Taxes
No matter how young your child is, tax season can be an opportunity to explain to children what taxes are, why we have them and who benefits from them.
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. There can be significant complexities involved with adults filing taxes, thus it can be a difficult concept to teach and help young kids understand.
Here are tips and teachable moments you can use to help your child gain a basic understanding of tax concept.
– Start by explaining the basics. Taxes are a part of working and people pay income tax on money they earn from their jobs. Every year, working people file their taxes by a deadline we call Tax Day, typically on or around April 15.
– Explain who collects our tax money. The federal government has a branch, the Internal Revenue Service (IRS), that collects the money, which helps pay for things that benefit everybody, including your family, such as highways and national parks.
– Give examples for how our tax money is spent. Use examples of things that your child is familiar with. Education, schools, the police and fire departments, libraries, and many other services which benefit our entire community are all great examples of how our tax dollars are spent.
– Teachable Moments:
1. When you’re shopping with your child for food or toys, you can mention that a state sales tax is added to the purchase amount. Use this as an opportunity to explain to your child that the sales tax amount that increased our total does not go to the store owners, and instead goes to the state to fund services like police and fire departments.
2. 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.
– Create a Family Tax Jar. Once your child has a better understanding of what taxes are, bring this concept to life by establishing a family tax jar. Create a tax jar and leave it out in a common area of your home. Each member of your family must contribute a percentage of their allowance or income. After a few months of saving, everyone in your family gets to vote on how the tax money is spent.
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