3 Common Misunderstandings About Taxes in Each Generation
Written by
J. Arky
Edited by
Jenna Klaverweiden
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A study conducted by Talker Research, on behalf of TurboTax, recently published findings on tax misconceptions across all generations in America. That data showed that of the 4,000 U.S. citizens surveyed who are planning to file taxes in 2025, evenly divided by gender and generation, some didn’t know all they needed to about filing taxes.
While it might be one of life’s unavoidable hassles, it is important to know where you fall in your tax bracket, how much you owe and how best to file.
Here are more details about the study and some of the most common misunderstandings about taxes in each generation.
Do Taxes Always Need To Be Filed?
Within the study, it was found that 27% of baby boomers tended to think that you don’t need to file taxes and it’s not possible to get a refund if your income is below the IRS requirements.
Per the study, those Americans who earn less than the IRS threshold are not required to file taxes but should under a few circumstances. This is particularly true if federal withholdings were taken out of their paychecks. It’s also beneficial to file if these individuals are eligible for certain refundable credits. Not filing would mean missing out on any refund they would be entitled to.
Do Immigrants Have To Pay Taxes?
About a quarter of Gen Xers millennials do not believe that immigrants pay taxes, which is simply not true. In fact, immigrants are legally required to file and pay taxes on any income made throughout the year in the United States.
According to the Tax Policy Center, immigrants of all legal statuses pay taxes. In fact, households led by immigrants lacking permanent legal status paid $75.6 billion in taxes in 2022, according to the American Immigration Council.
Are Students and Cash Earners Untaxed?
The youngest generation to be filing taxes (Gen Z) also has some misgivings of how and what to do in the process of filing. Of those surveyed, 20% of Gen Z respondents think that students do not need to file any form of taxes. On top of that, 13% were under the impression that if income was earned in cash, it did not require any reporting to the IRS.
While some students may not need to file taxes, there are circumstances in which they should. According to the IRS, unmarried dependent students should file taxes if their income is over a certain amount.
Also, according to H&R Block, all cash income needs to be reported to the IRS come tax time. It can be more difficult to track cash payments than, say, direct deposits, so be sure to plan ahead and keep track of that income.
Tax Knowledge Across Generations
The data showed that, across generations, many Americans are familiar with tax terminology, such as “dependents” (67%), “filing status” (61%), “tax deductions” (59%) and “child tax credit” (57%). Additionally, 53% of all those surveyed correctly defined “cost basis,” while another 52% defined a “standard deduction” correctly.
However, this tax knowledge starts to decline when it comes to things such as “below” or “above-the-line deductions,” with only 8% of all respondents accurately defining these terms.
The underlying message of the study is that matter what generation you might belong to, there is still some education to absorb when it comes to taxes.
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