Have a chat with your kids about taxes

While you’re enjoying all the beauties of spring weather at the park with the kids, you might have a conversation with them that goes like this:

“Where do you think all the playground equipment comes from? Who mows the lawn and pulls the weeds in the flower beds? And how is the swimming pool or the dog park maintained?”

The short answer to all those questions? Taxes.

As I was wrapping up work on my federal and state tax returns, I started thinking about how to make all this information about earned income, dependents, tax credits and property taxes relevant to youngsters.

When it comes to explaining taxes taken out of your paycheck, property taxes on your car and sales tax rung up at the grocery store, keeping it simple with your son or daughter is usually the best starting point.

To answer the first question about playground equipment, for example, talk about how the money to cover the purchase of slides and swings comes from some of the dollars people owe at the ice cream shop, the grocery store, the gas station or the fast-food restaurant. They’re called sales taxes.

If you still have your youngster’s attention, explain further that tax dollars are then used in your community to pay the workers who mow the park lawns, keep the swimming pool in tip-top shape and make sure the off-leash dog park is tidy.

No need to ramp up the conversation to include political opinions or gripes about tax dollars being wasted — unless your kids’ questions take you there. Listen to their cues, but I recommend letting them draw their own conclusions.

In my quest to encourage parents to find teachable moments about money in everyday activities with the kids, here are a few ideas to get youngsters thinking about taxes:

Sporting events: How do stadiums get built? What adds to the cost of a ticket to a ball game? Do players pay taxes on their enormous salaries?

You might explain, for example, that stadiums are often financed through higher taxes on hotel rooms, meals, rental cars and other services. If you have a recent rental car receipt, it might be an eye-opener for your 16-year-old to see that the $286 charge for six days on the SUV rental included about $100 in taxes.

Paychecks: If your kids are lining up summer jobs, they better know the difference between gross pay and net pay, which is the bottom line after taxes are taken out.

You’d be surprised at how many teenagers and college students think that if they’re being paid, say $8 an hour and work nine hours, they’ll take home $72.

It will come as a shock to them that they have to pay taxes too.

Small businesses: Taxes might also be part of the equation if your kid runs a small business, say, mowing lawns, repairing computers or baking cakes. Technically, your child might be required to file several tax forms, depending on the amount of income the business generates.

Granted, most kids won’t fall into any tax traps from being an entrepreneur. But it’s still a good idea to check on the Internal Revenue Service thresholds.

Along those lines, if you have a college student who will be spending the summer going door-to-door selling high-end cutlery or some other product, he or she may have to apply for a permit to collect sales taxes. Check with the local government.