A New Year of Taxpayers
Every year, clients and friends reach out to their children or grandkids as the begin their “journey” as taxpayers. It starts with that first job…”what is this money coming out of my check???”
Think of this as a summary of what I tell my own children.
First things first – when you take the job, fill out the W4 properly. It might seem simple, but since their employer can’t give them any answers, “our” child is facing a form with some confusing descriptions:
“Other income.”
“Deductions.”
“Extra withholding.”
Before your child goes to fill out their new hire paperwork, Google “W4” and look it over with them. Answer their questions, point out what is relevant now, and will be later.
Once they begin to get paychecks, verify with them that the proper amounts are being taken out. It is not uncommon to see supervisors make input errors with new hires and cause a tax problem for young people.
Fast forward to tax season
They receive this new form, W-2 and other tax paperwork they should hold on to. Some forms are easier than others to replace. But teaching good habits now will benefit them for a lifetime.
The biggest question is “When to file?”. For most folks filing for themselves and not using a tax professional for preparation is this: as soon as possible!
Two reasons: first, if they encounter any problems, they have time to fix it. Second, they can get their refund sooner!
One thing that is often overlooked with this first refund checks is the most important: Teaching those kids how to spend it properly. Teach them about putting money to work, not on consumer goods, but on purchases that have long-term value. Sure, they should spend some of it – it’s theirs, after all – but learning financial discipline is a valuable thing that isn’t taught in school.
Of course, if you have any questions, I am ready to help. Reach out if you need it!
All the best-
Jeff Roltgen, Tax Rescue CPA
Jeff@TaxRescueCPA.com
www.TaxRescueCPA.com
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