Teaching about Taxes: Tips and Tools

April 15 is around the corner, which provides a good opportunity for teaching your students about taxes. Even though these young people may have a basic understanding of how earning income works—if they're working, they filled out a W-4, after all—they are often surprised to discover that part of their earnings are withheld to pay income, Social Security, and Medicare taxes. At the most fundamental level, it is important that young people know how paying taxes will influence the amount of money they have to spend and save. But beyond the basics, it is also important for them to be aware of the more complex issues of why we pay taxes, what the money is used for, and how and by whom tax policy is determined.

The Federal Reserve, as our nation's central bank, makes decisions regarding monetary policy, which involves changes in the level of the money supply to influence price levels and unemployment. Congress and the president determine fiscal policy, which involves laws on taxation and the level of government spending. In times of economic expansion and contraction, both fiscal and monetary policy can affect economic indicators such as inflation, unemployment, and economic growth, but the tools that the central bank and the federal government use differ, as does the delegation of responsibility.

Below you will find many tools for teaching about taxes, from the basics to more advanced resources for students of economics. Taxes are, as the old Ben Franklin adage goes, "certain," but the uncertainty displayed by many young people holding their first paycheck can be eased with a little knowledge.

The basics: Paying taxes

It's Your Paycheck Curriculum Unit

Lesson 2: "'W' is for Wages, W-4, and W-2" offers learning activities, PowerPoint presentations, and whiteboard lessons that cover gross versus net pay, the FICA tax, and W-2 and W-4 forms. The lesson is available in PDF and as an online lesson in the It's Your Paycheck online course for students.

Personal Finance 101: Financial Forms Explained

This online interactive tool explains both the W-4 and 1040EZ with roll-over information boxes to provide a deeper understanding of these common forms.

Personal Finance 101 Chats

Simulated chat sessions between two cousins and an older and younger brother provide step-by-step instructions for filling out the W-4 and 1040EZ.

Putting Your Paycheck to Work

This series of fact sheets, available in both English and Spanish, covers the basics of withholding and deductions and gross versus net pay. The fact sheets also offer tips on how to get more from a paycheck. The series provides resources for educators, including activity guides and assessments.

Understanding Taxes: The Hows of Taxes

This teacher resource from the IRS includes 14 modules on the basics of filling out and filing tax forms. The accompanying student site includes activities, tutorials, simulations, and assessments for each module.

Advanced topics: Economics of taxes

Fiscal and Monetary Policy in Times of Crisis (Page One Economics Classroom Edition)

Article and discussion questions explore the difference between monetary and fiscal policy, how they work, who is responsible for conducting them, and how they function during economic crises.

FRED® in the Classroom: Debt and Deficit

A discussion of the national debt and deficit are natural extensions of a unit on fiscal policy. This lesson uses the online FRED (Federal Reserve Economic Data) graphing tool to increase student understanding of these topics.

Government Spending and Taxes

This Common Core lesson, which includes PowerPoint and whiteboard content, exposes students to various types of transfer programs and the relationship between taxes and government-provided goods and services. Students also debate the concept of economic equity as it relates to social programs. A middle school lesson, based on the American Girl book Scraps of Time 1960: Abby Takes a Stand, also includes an activity demonstrating the concepts of taxes, transfer payments, and transfer programs.

Income Inequality: It's Not So Bad

This lesson delves into the ability-to-pay principle of taxation, giving students the opportunity to compare a progressive and a flat tax system.

Tax Incidence

This series of whiteboard slides helps students navigate graphs showing tax incidence, burden, revenue, and deadweight loss.

Tic Tac Taxes!

This EconEdLink lesson, which includes an interactive online tic-tac-toe game, helps students distinguish among federal, state, and local taxes and the goods and services they support.

Understanding Taxes: The Whys of Taxes

Six tax-related themes are divided into 25 lessons from the Internal Revenue Service that explore the theory and history behind America's tax system, including lessons on taxpayer rights and responsibilities, taxes in U.S. history, tax fairness, regressive, progressive and proportional taxes, tax incidence, impact, and more. On the site are links to many related primary sources, as well as tax trivia featuring numerous interesting factoids. The accompanying student site includes more than 75 online activities.

U.S. Treasury Resource Center: Taxes

This website includes the articles "Economics of Taxation," "Taxes and Society," and "Income, Tax Liability & Payment."