Amazing Kids! Magazine

Taxes and What You Should Know About Them

By Fatima Yousuf, Money Smarts Editor and Contributing Writer

 

When I was younger, I saved money to buy two necklaces for me and my best friend. After working chores and saving money for around two weeks, I went to the store and found out that I still could not afford the necklaces because I didn’t know what a sales tax was.

Taxes are an amount of money that people have to pay to the government. People have to pay taxes for different things, depending on the country they live in. For example, a government can charge a tax on its citizens for buying food, books, and sports equipment. This means that everyone under that government is going to have to pay extra money when buying food, books, or sports equipment. This extra money goes to the government for its own use, which can range from funding public schools and hospitals to hiring firemen that keep people safe.

Some taxes can also be age-restricted. For example, in the United States, anyone who wishes to buy an item, regardless of age, has to pay a sales tax (a tax paid for buying a certain item). Depending on the country and state you live in, you may have to pay an income tax (a tax that is paid based on how much money you earn in a year) when you are as young as 16 years old! Thus, it is important to constantly be aware of which taxes you must pay and when you must pay them.

Furthermore, when paying taxes, it is important to note that you may be allowed to claim a tax credit. Tax credits reduce how much you have to pay to the government and let you keep more of your money. There are lots of different types of tax credits that apply to different types of people. For example, if you have one child, you can earn a tax credit of as much as $1,000! This means that you have to pay $1,000 less in taxes than what you usually would pay.

Moreover, when paying your taxes, it is also crucial to research whether or not you can qualify for tax deductions. Tax deductions reduce the amount of income you have, allowing the government to tax you less. For example, if you have a major surgery and need to pay for the hospital’s service, then you might qualify for a tax deduction. Through claiming this deduction, the government will record how much money you need to pay with taxes but without including your medical expenses as a part of your income.

Both tax credits and tax deductions allow people in financially tough spots (for example, single mothers, unemployed people, college students) to have some room to breathe in terms of money. Therefore, as you grow older and start to pay taxes, it is also important to remember where taxes are due and how much you are required to pay.

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