Tax Refund Due: How One Financial Literacy Teacher Leads Working Teens to Pure Gold

By Brian Page

April 11, 2017

Kids learn by doing. As the Chinese proverb goes: “Tell me, I’ll forget. Show me, I may remember. But involve me, and I’ll understand.” So when teaching kids financial literacy I try to shorten the jump from book studies to decisions that involve real dollars.

With tax season upon us, many of us would be looking for tax advisors and reputed professional tax resolution services providers to help us calculate the outstanding tax amount and give us some useful advice on financial matters. People working in different fields can have different needs, especially when it comes to finance and taxes. While some might want to file for their self employed taxes, others might want to do the same for business taxes. However, this tax season is the most crucial for working students who might need help filling out their tax returns-in class. (My nonworking students learn alongside a simulated return.)

One in three teens has taxable income each year and yet just one in a hundred files a tax return. This suggests the country is full of unaware teen “philanthropists” donating a small fortune to the government. Most fall well below the threshold for owing income tax. This year, my students qualified for a collective $2,498 in tax refunds.

Here is how I managed the lesson:

When I got the idea late last year I reached out to Rina Saperstein, who runs the tax program at Community Impact of United Way of Greater Cincinnati. I asked her about the My Free Taxes Program sponsored by United Way and H&R Block. This program makes filing free for anyone with annual income less than $64,000, and relies on the support of volunteers and use of free online software.

She was thrilled with the chance to personally guide my students through filing their returns, in part because her organization had never managed the program in a high school. “This program shows a great deal of promise and we hope to expand it in the future,” she says.

After my initial contact with Saperstein, and her enthusiastic response, I sent a letter home to parents to tell them about the tax lesson I was preparing-and formally opened it to every working student in our school.

In March, I showed students how to easily open a myRA savings account so that they might seed it with their tax refund. A couple weeks later I had students participate in a “tax” scavenger hunt. They searched my classroom for nine hidden tax deductions and credits-and learned whether each piece belonged in the deductions or credits category. This helped them understand why credits are more valuable than deductions and why it pays to hunt down every last one.

On “tax day” Saperstein and her colleague B.J. Stokes, both trained and certified, led my working students through the filing process while students ineligible to file took part using a simulator in the My Free Taxes software. My students were fully engaged in the filing process that will continue to be free for them until the day they become disqualified due to income limits.

A day after filling out the forms, I demonstrated our progressive tax system using seven jars-each one labeled with a marginal tax rate. We put appropriate levels of “income” in their corresponding jars, or brackets. The point was to show how not all income is taxed at the same rate-and even taxpayers in the higher brackets get a portion of income taxed at lower rates.

We then reviewed other ways we pay taxes including sales tax, property tax, and capital-gains tax. We discussed how our taxes get spent (bridges, airports, assistance for those in need) and why they are necessary. We wrapped it up with a review of tax basics and a fun, simple quiz I put together using Quizizz.

Following the program, Saperstein told me United Way volunteers from other cities across the country had inquired about the pilot, looking to bring it to their communities.

What did my students think? One told me: “I always thought filing would be difficult. By filing in class I realized it was quick and easy. And it gives me confidence to know that as long as I make less than $64,000 a year people will help me file my taxes for free.” This is an exercise I will repeat every March and April. It’s not too late for financial literacy teachers to pull together a quick version this year, and I encourage them to do so.

purblindly More on financial education:

Workers Want Financial Education with Their 401(k)s

Past-Due Bills and Low Financial Literacy Hand-in-Hand

India’s Financial Literacy Effort Set a Guinness Record

Posted in Youth on April, 2017