A recent survey reveals a concerning lack of understanding about taxes among younger Americans, highlighting a generational gap in financial literacy.
A recent survey conducted by Talker Research has revealed a concerning lack of tax literacy among younger Americans. The poll, which involved 4,000 US adults planning to file their taxes this year, asked participants to match various financial terms with their correct definitions. Terms included 'filing status,' 'standard deduction,' and 'earned income tax credit (EITC).
' EITC, a tax break designed to assist low- to moderate-income workers and families, aims to reduce their tax liability and potentially increase their refund. The survey found a significant age-related disparity in understanding EITC. While 59 percent of Gen X (born between 1965 and 1980) were familiar with the term, only 28 percent of Gen Z (born between 1997 and 2012) could identify it. Furthermore, less than half of all Americans accurately matched EITC with its definition. Baby boomers (born between 1946 and 1964) demonstrated the highest comprehension, with 56 percent correctly defining EITC, followed by 51 percent of Gen X. Millennials (born between 1981 and 1996) and Gen Z lagged behind, with 43 percent and 37 percent respectively, able to explain EITC correctly.Interestingly, women showed a slight edge over men in understanding tax concepts, with 48 percent correctly defining EITC compared to 46 percent of men. Other terms, such as 'standard deduction' and 'filing status,' were better understood by the majority of respondents. Financial expert and tax agent Karla Dennis, when asked about these results, was not surprised by the lack of tax knowledge among younger generations. She attributes this to the complexities of the tax system and the limited emphasis on personal finance education in schools. Dennis also points out that older generations have had more experience navigating taxes, especially before the advent of automated tax preparation software. She encourages individuals to seek professional help or utilize tax software to simplify the process and avoid future complications. Dennis further advocates for mandatory tax education in schools and community settings, emphasizing the importance of basic financial literacy, including understanding how taxes work
TAXES FINANCIAL LITERACY GENERATION GAP EARNED INCOME TAX CREDIT TAX EDUCATION
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