A Taxing Season for Foster Youth

By Monica Singh, California Youth Ambassador

It’s TAX season, you know what that means! Or do you? Have you taken the time to talk to a foster youth about taxes?

While taxes are vital for the U.S. government to provide essential needs and services to its citizens, ironically, many foster youth don’t realize the integral role federal and state taxes have played in their own lives. As tax revenue provides funding for much of social services, helping youth understand what role taxes play in their personal lives will allow them to see the bigger picture of taxes and social responsibility.

My time in foster care didn’t help me prepare for taxes. Although I’ve always heard people talk about taxes, I never quite understood what they were. The year after my 18th birthday, I was eligible to file income taxes for a refund. I didn’t know where to start! My coworkers were so happy to have received their W-2s but I didn’t understand what they were celebrating. Money, that’s what! I had my father file my taxes online with Turbotax and was given a refund of $700. It was exciting to receive my first refund, but looking back, I wish I’d known that there are ways to invest a sum of money like this, rather than blowing it on frivolous things.

Foster youth may be less likely to file taxes than their peers. In my experience, many foster youth have an untrusting view of the government because of their time in care. Foster youth also tend to have unstable placements, so when tax season came around they may not have developed a relationship with their current caregiver (or vice versa) that would allow them visibility or comfort in asking tax related questions pertaining to the household. It’s a subtle, but important, example of how a lack of family stability has a ripple effect into all areas of a young person’s life, including finances.  As a supportive adult you can help inform a newbie by having a simple (but important) conversation.

With the passage of extended foster care, many more young people may be eligible – or required – to file a tax return while they are still in foster care. Help a youth in foster care figure out whether or not they are required to file, and to avoid potential conflict with the IRS by determining whether someone else, such as a foster parent, is claiming the youth as a dependent.

Encourage youth to take advantage of free tax return preparation/advice from organizations such as the Volunteer Income Tax Assistance (VITA), which provides free assistance to individuals with limited income.  Inform youth to beware of cons or exploitive tax preparers. Make sure parenting youth and youth with very low incomes are also aware of the Earned Income Tax Credit which can provide hundreds or thousands of dollars more in a filer’s refund check. For those with incomes under $60,000, www.myfreetaxes.com is a great resource for learning more about the EITC.

Some Independent Living Programs (ILP) may offer a training or assistance with taxes as part of their financial readiness classes. Also, logging on to the IRS website with a youth and navigating the online (and typically free) resources may help ease some anxiety youth may have about filing taxes.

Lastly – If a foster youth is due a large tax refund, consider helping them think about how the funds can contribute to their financial future. Many young people lack the skills to wisely handle a large amount of money, this also holds true for foster youth. Whether or not they intend to go to college, a chunk of money from a tax refund could play into their budget or provide a safety net for housing costs, transportation, or recreational activities. Educating youth about savings accounts and investment options that will help them begin to accrue savings – and eventually build wealth — will be a good investment in a young person’s future.

About the author

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Manpreet “Monica” Singh, a 20-year old from Fresno County, spent 2 years in the foster care system. Currently, she is enrolled in a community college and also works for the Youth Training Project, an organization committed to developing and training best practice curriculums to child welfare professionals throughout California. A bilingual, Monica considers communications as her area of specialty and believes her skills to be a strength evolved from her time in care. Monica aspires to become a lawyer who works to influence change in the foster care system and for other oppressed communities alike.