“Why didn’t I learn this in high school?” is a common question I still ask myself constantly. Particularly during tax season with social media influencers and their get rich quick videos and unkempt tax hacks mucking about. The same tricks I feel I’ll never truly understand, use, or honestly trust.
Wouldn’t we all have liked to learn some nifty finance hacks just a little bit sooner—before some other inexperienced peer tried to teach them to us? The truth is, learning correct financial practices when we’re young makes it a lot easier to sift through all the financial tips throwing themselves at us from our phones. Financial education at a young age solidifies our ability to pick out the hacks that actually serve us and discard those that don’t.
Whether you’re a teacher or a parent, it’s time to step up and help the young ones in your life learn. Teach them to earn money, budget, save, etc. Or better yet, teach them about taxes. Trust me, your kids and students will thank you later.
You may be asking yourself, “How do I teach a teenager about taxes when they have little to no current experience in the world of finance?” And this is where I say, “Give yourself a little credit…and have some faith in kids these days”—children will comprehend more than you think if given the right chance and provided with the right learning resources.
Start by focusing on two essential tax lessons: tax brackets and how to fill out a W4 form.
Why should kids learn how to fill out a W4?
The truth is, the minute a child is old enough to drive, it’s likely they’re ready to search out employment opportunities—a chance to job-shadow and build their resume profile or even just a way to get a little extra spending money. And seeing as the W4 is one of the first forms they’ll be asked to fill out at the start of new employment, it’s vital they know how to act when it’s passed their way. Nothing is more embarrassing than starting your first day staring at a W4 form with little to no knowledge of what to do with it. I know, I’ve been there.
The amount of federal income tax deducted from a paycheck is determined by the W4, meaning the form must be filled out completely and accurately to guarantee that the correct amount of tax is withheld. But how would a teenager know that if it’s not been taught to them? Yes, teenagers are smart enough to know how to fill out the personal information section of the W4—this includes their name, address, and social security number—but when it comes down to the section where they’re asked to include details about any dependents, their filing status, and whether they want additional taxes deducted from their pay, they’ll PANIC. Heart racing, heat rising, upset stomach…the works. They won’t want to look dumb and it’s on you not to let them feel dumb.
Understanding tax rates is equally as crucial as teaching kids about a W4. Tax rates for the federal government range from 10% to 37%. A higher tax rate will apply to individuals with greater incomes, while a lower tax rate will apply to those with lower incomes. But it’s crucial for teenagers to understand that not all income is subject to federal income tax. For example, a U.S. citizen needs to make at least $12,400 a year (this differs year by year) to be required to file and pay taxes. This is particularly important to note at a younger age.
Though teaching about taxes can be complex, every kid should understand tax brackets and how to fill out a W4 form by the time they graduate high school—if not sooner.