Mrs. C8j came up with this one, an interesting question too (actually a group of questions):
- When should you start filing tax returns for your kids?
- When should the kids start doing their own darn taxes?
For us, we started filing tax returns for our kids as soon as they started earning money. They already had their own SIN numbers, so submitting it was not an issue.
The question that arises now is when do I hand over to them their tax files and say, “Go Be Free!” ?
I must admit that doing their taxes while they are at University was an advantage for me, since it was much easier to then transfer their tuition credits to my own tax return, however, eventually they are going to have to figure out how to do it themselves (I suppose). It’s funny that schools never really offer courses on doing your own taxes, not even seminars or the like.
I think Universities and Colleges would do well to teach this, since even with software (I learned on those darn long forms, with pencil and pen) it can get intricate quite quickly (especially if you are carrying tuition credits from University and even more Loan Repayments for school as well).
When is the best age to get kids to do their own taxes, or should the parents just keep doing them until the child asks to do it?
I started doing my own taxes at 16 and if my kids do any work when they’re 16 that’s when they’ll start doing their taxes too. A T-1 Short is hardly going to strain their brains too much. (OTOH many university-age kids have a harder tax return to figure out than most working adults.)
They already watch us do our taxes every year, so they know the drill even if they haven’t added the numbers yet.
I’ll start them on paper first (a) because I’m cheap and (b) because I think some people are intimidated by the paper form and I don’t want them to be.
I find it funny that people are hesitant to use the paper form because it stays still and you can see all parts of it easily and it can’t mysteriously erase, double, or lose any data. It’s actually simpler than a program!
Personally, I am in the camp of starting to file returns as the first hint of income (what, babysitting? flyer route? summer job at the local fair? tax return.). Otherwise start in high school.
As to when kids should be doing it themselves? Many universities run a clinic through the CRA that will do your return for free. When I did this program, part of the process required you to explain the returns and the forms to the client. Every time. This is a great option and starts to make your kids responsible for this kind of thing. Do this a couple of times and then think about having a sit-down to explain the finer points of TurboTax.
It may be easier to do it yourself, by why don’t we get in the habit of raising self-sufficient humans wherever possible?
Hi BCM.
I am a college student taking ACCT 240 Taxation for Financial Planning (link listed below) at Camosun, and one of the assignments coming up will be to prepare our own tax return. It will be interesting as unlike the rest of my classmates, I have a few things that they don’t as credits and will have a much longer job dealing with it. But knowing how to deal with it will make my life easier in the end.
I agree that as soon as the kids have an income they should be doing taxes, and the younger the better. MCDonalds starts them off at 14, so why not get them off the couch and earning themselves some income and some RRSP room! Teaching them how to do their taxes then when they are young would be great too!
http://camosun.ca/learn/calendar/current/web/acct.html
I agree with other that filing taxes should start at 17 or 18. As for when to have them do it themselves, I made my sons do their own right from the beginning with my supervision. I had to explain a lot of things, but I made them do the typing and clicking. I think this is a very useful way to teach them even though it takes longer than just doing it myself.
In the states, the kid gets their own return once they have enough income to owe any tax. Investment or any unearned income this year (2013) over $1000 falls under the ‘kiddie’ tax, and has a 10% rate up till the next $1000. Then it’s taxed at the parent’s rate. Our daughter’s college fund was giving off caps gains and dividends so even at 3, she had a tax return.
There’s one good reason to start filing tax returns for children when they’re 17. RRSP contributions are based on LAST year’s tax return so if they want to contribute at 18, they need to have filed a tax return the year before.
I’ve got a followup question for you :). If your children are basically not paying taxes anyway (i.e. just a summer job), then should they be investing inside or outside an RRSP? There’s more than just the numbers to think about.
Why invest inside an RRSP when you have no income? Trick answer is, make the RRSP contribution, but save it for 10 years and claim it when you make a lot more money!
The answer is,it’s the first year of work that’s the problem. If they start working full time and want to contribute to an RRSP, they can’t – unless they filed a tax return the year before. It’s the previous year’s tax return that generates the RRSP room for this year.
Interestingly, I had a fabulous (fabulous!) teacher in the early 80’s who handed his grade 5 class a basic long form, a pretend family’s numbers and made it our math classes for the week. I’ve never been intimidated by doing taxes thanks to that. I mean, I could do the basics when I was 10. 🙂
That teacher deserves an Apple! Excellent idea, and about the level of arithmetic needed too.
My sons are stuck with the accountant doin their taxes and I am stuck with the bill until they finish university. The accountant divides extra tuition tax credits fairly between the divorced parents.
When they are finally done school we will all switch back to doing our own taxes and if they can’t figure out TurboTax then all those years of expensive schooling will have been a waste.
I think that sums it up nicely (except in my case I am the one doing their taxes on TurboTax)