Introduction to a Tax Refund for Kids and Teens
This video explains the concept of tax refund in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about income tax refunds, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.
Suitable for students from grade levels:
- Kindergarten
- Elementary School
- Middle School
- High School
The topics covered are:
- What is a tax refund
- Why would you pay more tax than you have to
- Is it good to get a tax refund
- How to spend the tax refund money
What is a tax refund?
A tax refund is money that a taxpayer gets back from the government if they paid more income tax than they owed.
For example, if you were supposed to pay $10,000 in income tax, but paid $11,000, then you would get back the extra $1,000 as a tax refund.
Tax refunds are usually issued within three weeks of filing your electronic tax return, and can be deposited directly into your checking account or received as a paper check.
Why would I pay more tax than I have to?
There are many reasons why you might end up paying extra tax.
Your employer might have withheld more tax from your paychecks than needed based on your W4 form.
If you are self-employed, you might have overestimated your quarterly taxes and therefore paid extra tax.
There is also a possibility that you were eligible for refundable tax credits – like child tax credit or education tax credit. If the credit is more than the tax you owe, you will receive a tax refund.
Is it good to get a tax refund?
A tax refund certainly feels exciting! In fact, many people think of tax refunds as free money – but that is far from the truth.
When you get a tax refund, it means you essentially gave the government an interest free loan! The government got to use your money for free, and is simply returning what was yours to begin with!
So it is better to not overpay taxes in the first place than it is to get a tax refund.
However, if you put the refund money to good use, a tax refund isn’t such a bad thing.
What should I do with the tax refund money?
Many people spend the refund money recklessly. A better use for it would be to lower your debt by paying off at least a portion of your outstanding loans like student loans or credit card debt.
You can also use it to build or boost your emergency fund.
Yet another good option is to invest the tax refund money.
Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens
Podcast: What is a Tax Refund
Fun, informative and concise episodes by a 10-year old, breaking down complex financial concepts in a way that kids and beginners can understand. Episodes cover personal finance topics like saving, investing, banking, credit cards, insurance, real estate, mortgage, retirement planning, 401k, stocks, bonds, income tax, and more, and are in the form of a conversation between a cowboy (a finance novice) and his friend, a stock broker. Making finance your friend, only at Easy Peasy Finance.
A little bit about me: I have been fascinated with the world of personal finance since I was 6! I love to read personal finance books, and keep myself updated on the latest by reading various personal finance magazines. My friends often ask me questions about finance because they find it complex and intimidating. That’s what inspired me to start my YouTube channel called Easy Peasy Finance when I was 8, and this podcast 2 years later.
Everything you need to know about an income tax refund: What is a tax refund, Why would you pay more tax than you have to, Is it good to get a tax refund, How to spend the tax refund money, and more. Show notes and transcript at: What is a Tax Refund? A Simple Explanation …
