Why as a parent you should stop filing your kids’ taxes

As a parent, you want to see your kids succeed, and that often means stepping in to help—whether it's guiding them through homework or doing their laundry so they have more time to study. As they get older, you might even feel compelled to file their taxes for them, to ensure they (and you) don't miss out on benefits and refunds. But by doing so, you might actually be holding them back from gaining knowledge they'll need for a healthy financial future.

“Tax literacy is an important part of adult life,” says Stefanie Ricchio, a tax expert at TurboTax Canada. “And filing taxes is a skill everyone needs.” Doing your kids' taxes for them might feel helpful, but when you do so, you could be standing in the way of them learning this essential financial skill for themselves.

Whether you have a teen who's excited about their first paycheque or a young adult with a job who's still living at home, now is the perfect time for you to step back and let them learn how to file an income tax return. That's because their taxes right now are probably as simple as they'll ever be, and the risks of making an error are low.

“Tax-filing mistakes now are pretty low stakes when you're young and not earning much,” says Ricchio. “Learning early on what you can and cannot do when filing could save your kids from making costlier mistakes later in life.”

Downsides of filing your childs taxes

It's understandable why you might want to file your kids' taxes for them, especially if they still live at home. In some cases, it may even seem easier, especially if your finances are intertwined, because, say, you're the one claiming their tuition receipts.

But short-term efficiency isn't necessarily best in the long run. For example, taking care of taxes for your kids could create a sense of dependency on you at a time when they could be learning skills to become more independent. It could also be a missed learning opportunity—not just about tax filing, but about taking charge of their financial life and meeting important deadlines.

Plus, letting kids work through their taxes will help them discover that it isn't as hard or scary as it's sometimes made out to be, which could give them a boost in their financial confidence.

Why teenagers and young adults should file on their own

On its own, filing taxes might seem like a relatively small task compared to everything else we have to get done in a year. And in some ways, it is. But when teenagers and young adults learn to file their own taxes, the benefits go beyond simply acquiring this one skill. For instance:

• Filing taxes builds and contributes to a wide range of real-world skills, from organization and responsibility to understanding how income, benefits, and tax credits and deductions work.
• When students file taxes for the first time, they're working toward both independence and career readiness.
• Early tax experience helps teenagers and young adults learn skills that will help them with future tasks such as applying for student loans, filling out rental applications, or seeking out jobs.

Tax filing for teens and young adults

You've taught your kids so much throughout their lives. Now you have the chance to coach them through learning another skill: how to file their taxes and become more financially independent. “The trick is to let them take the lead,” says Ricchio. TurboTax, for instance, will guide your teenager or young adult through the tax-filing process, with you there to lend a helping hand when needed.

Here are a few things to know about filing taxes for young adults:

• If your teenager has no or low income (less than the basic personal amount), they may not be required to file their own tax return. But there could be benefits to doing so, such as acquiring RRSP contribution room, receiving any applicable tax refunds, and accessing certain government benefits (such as GST/HST credits, the Ontario Trillium Benefit, or Quebec's Solidarity Tax Credit). Tip: If your child files a tax return in the year before they're old enough to receive a benefit (such as GST/HST credits, which start at age 19), they can start getting the money the following year.
• If your child is paying tuition and you want to claim those tuition credits on your own taxes, have them prepare their return first, because you'll need to pull certain numbers from their return into your return to complete the process.
• You can still claim your child as a dependent if they file their own tax return. Simply have them indicate on their return that they are claimed as a dependent.

Inexpensive tax filing with TurboTax

Make this the tax year you give your kids the most valuable financial gift there is: guiding them one step closer to full adult independence by sitting next to them while they file their taxes. Be there to answer questions and offer advice, but let them sit in the driver's seat.

TurboTax makes the process simple by providing easy-to-follow guidance when needed. TurboTax is inexpensive (in some cases, free), and you can get expert help if you need it.

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