Gen Zers Will File Their Taxes for 40 to 60 Years: Here’s What They Need To Know
Written by
John Csiszar
Edited by
Gary Dudak
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Generation Z is generally defined as those born between 1997-2012. As of 2023, this puts their current ages at approximately 11 to 26. These young ages afford Gen Zers both an opportunity and a challenge. On the opportunity side, they can learn, plan and save their way to successful retirements more easily than older Americans. However, it also means they’ll have to quickly get up to speed on important financial concepts as they enter the workforce — especially taxation.
To help explain what Gen Zers need to know about filing their taxes — something they will do for 40 to 60 years or more — GOBankingRates consulted Mark Steber, Chief Tax Information Officer at Jackson Hewitt Tax Services. Here are some of his most important insights.
Taxation Is an Ongoing Obligation
April 15 is so loudly touted as “tax day” that some Gen Zers might think it’s the only day they have to worry about their taxes. But the reality is that attending to federal income taxes is a year-round event. In fact, understanding that taxation is an ongoing obligation is what Steber considers to be “the most important thing that Gen Zers need to know about their federal income taxes.”
Beyond the Tax Day deadline in April, Steber notes that “there are things you can do throughout the year that will impact your tax return and personal situation, from ensuring you’re withholding the correct amount on your W-4 to maximizing the credits and deductions you might qualify for.”
In other words, start by viewing taxation as built into the very fabric of your ongoing financial life. Rather than gearing up for a single tax filing every April, incorporate your tax planning into every financial decision you make.
Tax Returns Build Upon One Another
Steber emphasizes that for Gen Zers, keeping on top of things that impact your tax return “shouldn’t be a ‘one and done’ in life, especially because you’ll be filing a federal tax return annually for the next four to six decades.”
The important concept to understand here is that your annual tax returns build on one another. Deductions you take one year may be enhanced or eliminated the following year, or you may be able to carry over capital losses from a prior year to help reduce your income tax in the current year. Viewing your tax returns as one-off filings isn’t a sound strategy for minimizing your tax liabilities.
Staying on Top of Your Taxes Can Be a Challenge
As Steber emphasizes, there’s a lot more to filing taxes than simply submitting a 1040 every April. From choosing your withholding level and understanding your deductions and credits to knowing whether or not you have to pay quarterly taxes, there are lots of potential pitfalls along the way when it comes to managing your tax situation. Even if your taxes are relatively simple, you may have to come up with a large amount of money every April, especially if you make some missteps along the way.
This is why trying to do it all yourself — especially as a Gen Zer handling taxes for the first time — might not always be the best option. “I recommend you find a tax pro who can help you navigate the single largest financial transaction you do each year,” Steber said.
If the cost is your concern, Steber says not to worry. According to the tax expert, “They’ll more than pay for themselves, as you could be leaving money on the table if you do it yourself.”
Get a Head Start Now
One of the huge benefits that Gen Zers have is their youth. By starting to learn about taxes early on, Gen Zers can be more than prepared by the time they reach working age.
This type of preparation saves both time and money. It can also remove some of the stress and mystery from the tax-filing process, which can be overwhelming if you think of it in terms of a 40-to-60-year obligation. Rather than trying to reinvent the wheel, follow the advice of tax experts like Mark Steber, whose suggestions can get you ahead of the game when it comes to your tax situation.
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