SUSIE GHARIB: Tax time is here, and people are scrambling to get their
taxes ready for the April filing deadline. But have you ever tried
explaining taxes to your kids? With some tips, here’s Neale Godfrey with
tonight’s “Kids and Cash.” She’s chairman of the Children’s Financial
NEALE GODFREY, CHAIRMAN, CHILDREN’S FINANCIAL NETWORK: Tax time is
here and your kids will pick up on your grumbling. Explain to your kids
that taxes are the money we must pay the government to pay for things like
schools, firefighters, and police officers.
There are different kinds of taxes, but the two that will affect your
youngster the most directly are income and sales tax. Everyone who lives
and works in the United States has to pay taxes. Explain that that is fair
because those people enjoy and use services that the government needs to
Sales tax is a surcharge that is added to specific items that you buy,
like food and clothes and gas and toys. The next time you are in a store,
show your kids a receipt and let them find the sales tax. Explain that
most people also have to pay income tax, if they earn a certain amount of
It’s time to bring home this concept, but give your kids a break. I
recommend that you take 15 percent out of each allowance payment so that
they can put it into a tax jar. Then, you as a family, your government,
will vote on how you want to spend the money.
It won’t be much, maybe only enough for a trip to the ice cream store,
but it will start to get the point across. Hopefully, this will be early
exposure to taxes and help to avoid what I call “paycheck shock.”
Remember thinking, who is FICA and what is he doing taking money out
of my paycheck?
I’m Neale Godfrey.