One of my favorite things about writing blogs regularly is that I get to share strategic insights that help you stay sharp with your money.

I like to make sure you’re prepared and able to find your footing with things.

You do the same kind of thing for your children (and keep your fingers crossed that they’re listening).

So, let’s talk about taxes and your young people today.

One thing your teenagers probably claim regularly is that they’re not dumb. They insist that they understand everything. But we both know you wouldn’t let them drive your car without at least one lesson, no matter how much they insist.

It seems obvious to say that you wouldn’t let them face their first tax return on their own without any guidance either. Because you know there are a lot of ways things could go wrong.

Filling out any tax form (even the simpler ones like a 1040) isn’t easy – especially since “How to file taxes” generally isn’t taught in Redding schools, despite IRS efforts. What IS easy to do is make a mistake. Some filing mistakes can be easily righted… others, not so much.

That’s why today I want to insist (for their sake as well as everyone else’s): start offering your children guidance about financial/tax stuff. Especially when they’re working summer jobs and seeing the chunk the government bites out of their paycheck. They need to learn now what Uncle Sam expects of them when they are finally standing on their own two feet.

Let me help you get that conversation started…

Dennis Fritz’s Guide to Talking About Taxes for Teenagers
“Financial education is more valuable than money.” – Mac Duke, The Strategist

As adults, we’ve seen firsthand the many struggles that come with filing taxes. But it’s even harder to remember what it felt like the first time we had to do it. Which is why you want to do the hard work of preparing your child to fill out a Form 1040.

Did you know that over 88 percent of young adults feel unprepared to manage their finances after high school? Taxes are a big part of that equation, which is why you want to educate your teenager about taxes they’ll inevitably have to pay and file for.

What should you cover when you have the “taxes for teenagers” talk? Here are some starting questions:

– How much money can you make before you have to file taxes?
– What is a “standard deduction”?
– What kind of taxes do you have to pay to the state?
– If taxes aren’t taken out of your paycheck, how and when do you pay them?
– Does something happen if you don’t pay taxes?
– What do you have to fill out to file your taxes?

Let’s think about taxes for your teenager when they’re no longer a dependent in your household. They get their first real paying job only to be shocked by how much the government takes out of what they take home.

Then, they find out that they have to fill out a form to let the IRS know how much they made (don’t they know that already?). Of course they can do it electronically, but they have to filter through which site to choose. And when they start answering questions to fill that form out, they’re met with more questions. It is complicated — “What’s a 1099?” they ask themselves.

Some guesswork happens, some taps and clicks, and then they hit submit. It’s done. But did they talk to you to make sure they were doing it right? Do you even know what to tell them?

It’s a good thing you have a knowledgeable tax pro to show them the way and explain taxes for your teenager in language they understand and can repeat. Here are a few practical steps:

Start with everyday examples. Explain how taxes impact their summer job earnings. For instance, if they earn 6K, they likely won’t owe any federal income tax because the standard deduction for single filers in 2024 is 14.6K.

Leverage your favorite Redding tax pro’s expertise. When you feel overwhelmed by complex tax codes, you can lean into my knowledge. That’s what I’m here for. I can explain concepts like the Earned Income Tax Credit (EITC) – a tax benefit for low- and moderate-income earners – that might apply to your teen’s situation.

Encourage record keeping. Help your teen develop good habits by tracking their income (wages, allowances) and expenses (phone bills, school supplies) throughout the year. There are lots of softwares to help you do this, and it’s crucial for setting them up for tax filing in the future.

Now, as you have the conversation about taxes for teenagers, remember to keep things on their level. Avoid jargon and focus on building a basic foundation. Keep the lines of communication open. Let your teen know it’s okay to ask questions if they feel confused.

And, let them know that when their tax filing becomes more complicated and time-consuming than they feel prepared for, they can always lean into a professional you know and trust to guide them.

Everybody makes mistakes, and tax returns are a hotbed for them: the wrong deductions, lousy math, missing info, and misspelled addresses are some of the most common goofs. (Can you believe that some taxpayers actually misspell their own name?)

So, tell your child it’s okay to screw up once in a while, but they’d better make sure the mistake’s an honest one. The IRS forgives only so much and claiming “I didn’t know” isn’t really a valid reason to them…

Talk with your children about consulting a trustworthy Shasta County professional tax preparer to maximize the benefits of filing properly. Not to toot our own horn, but professional tax prep is a service you can easily afford to have – and if your children are just starting to do their own taxes – it may be one you can’t afford to be without.

Here for you,

Dennis Fritz