Teachers Are Omitting a Big Part of Financial Literacy

Parents and students are gearing up for a new school year, and this fall brings a welcome addition to classrooms nationwide. Personal finance courses, long an afterthought in the classroom, are now a graduation requirement or legislated for implementation in 30 states.

This is good news. But a crucial component is often missing from or mistaught in these courses: taxes. You wouldn’t hand a 16-year-old the keys to a car and expect them to know how to drive. We shouldn’t expect the next generation to fully grasp financial literacy without a basic understanding of taxes either.

Right now, most Americans don’t understand how the taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. code works. According to a poll conducted by TaxEDU, a majority of respondents do not have a basic understanding of common tax concepts. Sixty-four percent of respondents couldn’t correctly identify the difference between a credit and a deduction. Fifty-two percent were unaware of how tax bracketsA tax bracket is the range of incomes taxed at given rates, which typically differ depending on filing status. In a progressive individual or corporate income tax system, rates rise as income increases. There are seven federal individual income tax brackets; the federal corporate income tax system is flat. work. Most believed that a bigger tax refundA tax refund is a reimbursement to taxpayers who have overpaid their taxes, often due to having employers withhold too much from paychecks. The U.S. Treasury estimates that nearly three-fourths of taxpayers are over-withheld, resulting in a tax refund for millions. Overpaying taxes can be viewed as an interest-free loan to the government. On the other hand, approximately one-fifth of taxpayers u was a good thing.