A recent survey conducted by Talker Research on behalf of TurboTax has revealed that Generation Z (Gen Z) exhibits notable misunderstandings regarding tax obligations and financial terminology. The study, which included 4,000 American taxpayers, highlighted several misconceptions prevalent among Gen Z individuals.
Approximately 17% of Gen Z respondents believe that any expense can be written off as a business expense when filing taxes. In reality, only expenses that are necessary and directly related to one’s business qualify for such deductions. Additionally, 20% of Gen Z participants think that students are exempt from filing taxes, and 13% assume that individuals paid in cash are not required to pay taxes. These beliefs are incorrect, as tax obligations depend on income levels and sources, regardless of student status or payment method.
The survey also assessed familiarity with tax-related terms. Less than half (47%) of all respondents could accurately define the “earned income tax credit (EITC),” with only 37% of Gen Z demonstrating correct understanding. This indicates a need for improved financial education among younger taxpayers.
When it comes to filing taxes, 23% of Gen Z individuals have filed their own taxes directly with the IRS without assistance. However, a significant portion still relies on external help, with 32% seeking assistance from their parents. This reliance may contribute to the observed knowledge gaps.
The findings underscore the importance of enhancing financial literacy among Gen Z to ensure accurate tax filings and compliance with tax laws. Educational initiatives focusing on tax obligations and financial terminology could help bridge these knowledge gaps and promote better financial decision-making within this demographic.
