Presented by Sara Kappos
It’s a big day when a young adult receives that first paycheck from a part-time job. Yet, the joyous mood soon gives way to the shock of realizing that some pay is being withheld.
Before that moment happens, you’re in a unique position to teach your children to become financially literate about taxes. And we’re here to help.
We’ve combed the internet to provide you with curated content that covers basic financial principles in an engaging way. For starters, Tax Filing Requirements for Children is an excellent article that fills you in on the rules regarding your children’s tax obligations.
The IRS requires that all taxpayers file a tax return, regardless of age. Unlike adult taxpayers, however, children have more flexibility in choosing to comply; for instance, your dependent children (those you primarily support and are under the age of 19, or 24 if a full-time student) who earned more than $12,400 in 2020 must file a personal income tax return and might owe tax to the IRS.
Other rules governing a child’s investment income—an amount that exceeds $1,100 in a calendar year—will determine whether you can include that unearned income on your own return or if your child must file separately.
Next, you’ll hear from kids who hold nothing back when they first grasp the concept of paying taxes. The video, Kids on Taxes: Paying Taxes?, gives you the younger generation’s take on the subject—and don’t be surprised if you and the young adults in your home have the same point of view.
Lastly, Professor Sarah Barnes puts the subject in historical context. In her fast-paced video, America's Founding, Episode 3: Taxes and Abuse of Power, the past comes alive as she explains how the unfair imposition of taxes by the British sowed the seeds of colonial rebellion that ultimately led to the founding of our country.
I encourage you to view these materials with your family and talk them over. And, if any questions arise, please feel free to contact me, and I’ll help provide the answers. Getting young people comfortable with money matters during their formative years can go a long way toward making them financially responsible throughout their lives. I’m sure you’ll agree that it’s an outcome that works to everyone’s advantage.