Basic Tax Math – Pt. 1

My two sons, oldest on the left

I have two adopted boys. We have been a family for over two years now. My oldest is 13 years old at the date of this writing. He has learned English very quickly even though he is still struggling with some nuances of our weird language. One year ago he told me he wanted to learn how to do taxes thinking it would be fun to sit at a computer all day and play video games, after all that’s all I do, right?. In fact, he pestered me about it a month after his initial request. So I eventually sat down with him, made a fictitious W2, provided him the one page 1040EZ form and the 23 page instruction booklet that tells you how to complete a one-page 1040EZ form.

When he looked at the big instruction booklet, he wasn’t very interested in all of that reading.  So I threw it in the trash.  With a return this simple, all you need to do is read the instructions on the form itself.  He then took the W2  that I gave him and other than explaining some of the harder English words,  he went through each line of the return and completed it.  As you can expect, he was very proud of himself and made mother know he could now do dad’s job and play video games all day.

The next morning while he was eating breakfast , he looked up from his cereal bowl and asked me in his thick European accent, “Dad?”… “Yes son”… “When I have to do my first tax return ,will you do it for me?”… “Yes, but you did perfectly fine  by yourself yesterday”… “I still want you to do it – it’s too complicated.”

Now,  he is only 13 years old,  but he  already manages his own checking account,  debit card,  investment account, and even his own eBay account.  He’s a serious saver as well.  I wanted him to learn this stuff early and even had him read a lengthy book  on how to buy stocks.  Something my grandfather did with me at the same age. Pretty good, I’d say.

I think this is something lacking today.  We don’t teach this stuff at home and our schools are too busy ushering the herd through the system.  When I was in 10th grade,  my United States history teacher offered  to teach each of us who had jobs how to file a tax return.  Four of us took her up on the offer. We brought in our w2s  and she walked us through the entire tax return in less than 10 minutes.  She gave a harder,  full class assignment to the rest where we had an extra 30 minutes  to ourselves after finishing the returns.  I was surprised how easy it was and we all talked about what we would do with our refunds.

Now granted, those are very simple returns that require very little  knowledge of the tax laws .  However,  I find that many people do not understand the mechanics by which taxes are withheld, paid ,and reconciled. As my son says, “its too complicated!” It really shouldn’t be. My next couple of entries will address this. Enjoy!