How to Talk to Your Kids about Taxes

Kids don’t always realize how good they have it.

In April, for instance, they’re not the ones who have to calculate taxes–or pay them.

But it’s never too early, says Neale Godfrey, bestselling author and chairman of the Children’s Financial Network, to start talking with kids about taxes.

The basic message to get across, according to Godfrey: taxes “help everyone.”

And at any age, parents’ attitudes about taxes will affect how kids think about them, says Godfrey. So parents should “try to avoid the big grumbling around tax time,” Godfrey says. “Taxes aren’t bad. They may have administration problems, but a country can’t function without them.”

Elementary age kids, Godfrey says, can learn this lesson by playing what she describes as The Tax Game. “Explain that there are some services that everyone shares and the government pays for, like roads, bridges, police, schools, hospitals and parks,” she says. Then, in the course of daily life, ask kids “to identify what would be paid with taxes.”

Middle school, says Godfrey, is a good time to start taking “taxes” out of kids’ allowance. A percentage of each dollar they get can go “into the family Tax Jar,” says Godfrey. The trick in getting kids engaged is that the money doesn’t just stay in the jar. Instead, “they have to think of something as a family they need, for the common good” – which gives them a sense of accomplishment, and the power of saving, as well as teaching them about the reality of the taxes they’ll pay in adult life.

By high school, Godfrey says, parents can start introducing kids to actual tax documents: a real pay stub or automatic transfer statement. “Tell them how the tax brackets work,” Godfrey suggests. “Explain FICA and the different taxes and really walk through the deductions and how they work. By the time your kids get their first job, they should understand how taxes work and be able to fill out the simple tax forms.”

Nobody loves to pay taxes. But, with a little ingenuity, it can be O.K. to talk about them.