A 16-year old's introduction to income tax

Gary,
You guys are doing a great job! My dad did the same thing with me and it taught me to appreciate the things I buy with my own money. My dad offered to help me with my first car, but he told me if he did invest, then he would have some say in how it is used etc. I declined and paid for it my self, along with insurance and everything else.

Yeah, my boys were upset when they first started working and Uncle Sam taking half. But that is the reality check for them. Now one is in the Navy and the other is an Air Traffic Controller in Alaska. Nope he doesn't fall asleep.
 
The exemptions claimed on a W-4 have nothing to do with the tax return. All the W-4 does is allow a person to adjust the withholding on their pay check. Some people fill out the W-4 as Single -0- so they get the max withheld and then get a refund at the end of the year. In the old days kids who lived at home, worked and earned less than a certain amount could claim themselves as an exemption. Some smart Treasury guy took that away, we each get only one exemption. Gary claimed his son on his return, that exemption was worth far more tin reduced taxes to Gary than to his son. The boy learned a good lesson and that lesson is why the government wants payroll withholding. Payroll withholding is just numbers, to Gary's son it was real money. We have a conservative in the making.

Gary, I agree with having your son work for his car, he will appreciate much more than if mom and dad gave it to him. He will take better care of it and he will go far in life
 
^== Also, the no car loan rule is also important. I have seen many twenty-somethings saddled with so much debt that couldn't breath.

Be careful he doesn't learn the other lesson: Working hard and paying your own way won't get you as far as being well connected. Be careful of good-for-nothing friends who don't work, have nicer toys, and drive better cars.
 
Four Suns said:
One of my sons has been obsessed with owning his own car since he was 14. I have this thing about buying kids cars probably because when I was younger, I had to work to get my first car and pay for everything. So my deal with all my kids is that 1) they can't get a car loan and 2) I'll match them $1 for $1 of what they save toward the car of their choosing.

My 3rd son has really been serious about this. He wants a nice car... he went to work at a fast food restaurant at age 14 and has worked his way up and is now 16. He works every chance he gets and usually works 30-40 hours/week during the school year. He's also maintained a very good GPA in school and is in my office working on homework after work until midnight on many nights. He also fixes computers on the weekends for people.

So yesterday is tax day... and I told him he needed to fill out taxes due to the money he made. He had been claiming "Exempt" on his W4 so he had paid no federal income tax... and guess what? He now has to write a nice size check to uncle sam out of his bank account. Unfortanately, he had the process of saving half of his check and spending the other half on items he wanted (like the newest iPhone, etc.). I've never had to pay for any of this stuff for him since he's been 14.... and now the government wants part of his savings account.

I thought the kid was going to cry. He said it wasn't worth working as other friends of his are getting new cars and they don't even work. Between parents that give their bratty little kids everything they want and the government pitching in the rest via wealth redistribution, it's doubly hard to explain how this is fair other than "It's not fair that you have a job and work hard and other kids don't have jobs. Do you expect them to not have a new iPhone and new car just because you work and they don't?"

We discussed taxes... It's amazing how 45% of the country doesn't pay income taxes but a 16-year old kid trying to save for a car (and not borrow money) pays taxes on anything over $5700. The system really is geared towards "Don't work much and get a car loan" instead of "Work hard, save money and pay cash." He wants a flat tax on what you buy and not what you make. I told him to run for president after college.

The good news is that he now has a clear understanding why I scream at the TV sometimes.
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If he runs on the promise of a flat/consumption tax, your boy has my vote!

Doug
 
Four Suns said:
He just changed it. I guess if you are 16 and living at home and working hard, you are considered "rich".... It's good to know that the 50% of people that pay income taxes include minors that live at home trying to work hard...

Parents don't pay for taxes on dependents. Kind of curious what would happen to a 16-year old if he told the IRS to shove it... I guess they would "try him as an adult."

Seems kind of odd that the government can demand taxes from a 16-year old (i.e. minor) and yet not allow them to vote...
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Very interesting perspective. Curious how circumstances would change in the US if voting was a right which was earned based on being a contributing member of society, as opposed to reaching a certain age. How would the voting change if only those contributing had a say in the distribution of wealth. I think I like the concept and am in favor of rewarding positive contributions, not socialization.
 
drock1892 said:
If he runs on the promise of a flat/consumption tax, your boy has my vote!

Doug
Click to expand...

The problem with this concept is that governments like the idea of the consumption tax but the just want to add it to what they already take out of your pocket. (and yes Australia does have a consumption tax that goes by the name of Goods and Service Tax - GST)

I just hope that I can get my kids to be responsible and realise that they have to work to get what they want rather than just look to Dad to be their portable ATM.
 
Teaching kids about money is one of the most important life lessons out there. I got a young man working for me that has a 2500 Ram pickup, still owes 8k on it. Complains about the gas prices but goes out and buys a 4 wheeler? :huh: I asked him why he's not trying to pay the truck down so he does not have a payment and gas at the same time? His answer was he wants to have fun?

Funny, my fun came after my home work, yard work, house work and a few other things my parent could think of before I got my time.

Gary, keep up the good work, maybe your boy will be President one day and fix things. I know that person with no birth certificate who says hes in office now just ain't fixing a damn thing for any of us.

Best regards
 
JindySR said:
The problem with this concept is that governments like the idea of the consumption tax but the just want to add it to what they already take out of your pocket. (and yes Australia does have a consumption tax that goes by the name of Goods and Service Tax - GST)

I just hope that I can get my kids to be responsible and realise that they have to work to get what they want rather than just look to Dad to be their portable ATM.
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AGREE

Plus, there already are consumption taxes. Many local goober mints charge 6-8% sales taxes.
 
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