>> Production funding and educational outreach for Biz Kids is provided by a coalition of America's credit unions, where people are worth more than money.

A complete list of individual credit union funders is available at wxxi.org.

>> Every day, America's credit unions help members with their financial needs and with programs like Invest in America.

It's only fitting that credit unions support Biz Kids because financial education is what we do.

Learn more at lovemycreditunion.org.

>> Imagine if you will a world with no taxes.

A world with no roads, schools, or hospitals.

A world with no clean water, sewage, or garbage pickup.

No cops, firefighters, or other emergency services.

You're hurtling toward a destination, you just don't know it.

You've entered The Taxless Zone.

>> ♪ When making money is the aim ♪ These kids they bring their game ♪ They're the Biz Kids Can you dig it?

♪ They know what's up and let you know ♪ Just how to make that dough they're the Biz Kids ♪ Right on ♪ So learn a little more about bringing money ♪ through the door ♪ They're the Biz Kids Right on.

♪ >> Oliver Wendell Holmes once said, "Taxes are what we pay for a civilized society."

>> Oliver Wendell who?

>> Look it up.

>> What I'm trying to say is that taxes pay for our civilized society.

I mean, a lot of the things we pay taxes for are things that we need.

>> Like bridges, highways, even the military.

>> Police.

>> Fire protection and post offices.

>> Some of these things are beautiful to look at, like libraries and parks.

>> Taxes also pay for a few things that we don't particularly enjoy looking at like the sewer systems.

>> Eww, gross.

>> That's not gross.

What's gross is what happened before we paid taxes to provide sewers.

You know what the cities looked like then?

>> I...

I think I'm going to be... >> And there was disease.

People threw their waste in the streets, and there were no hospitals to provide treatment for the sick.

Why?

No taxes.

>> Taxes.

We may not like to pay them, but they do help support a civilized society.

>> I'm not feeling too civilized.

>> All right, today we're going to learn about something that people think they don't like, but they really do, and that's taxes.

All right, hear the way I said taxes, taxes, taxes?

See, we say the word like it's something bad.

I mean, people think taxes are bad, but really they're good.

I mean, where would we be without taxes?

Taxes are what pays for civilization.

It pays for roads.

It pays for water.

It pays for garbage to get collected.

It pays for everything in the schools.

The pencils, the paper, my salary.

>> Really?

How much do you make?

>> Well, that's, there's a whole different story.

I don't want to get into it.

Anyway, the main thing is that taxes pay for education, and that is the clearest example of a society's prosperity.

>> Wait.

Do taxes pay for recess?

>> Yeah, recess, too.

>> Recess!

Recess!

>> We're at Southwest Pool, and it is a community pool.

I started out here as a kid learning lessons, and I've loved it ever since.

>> I am a swim instructor, and I am a lifeguard.

>> A lifeguard's job is very important because we're helping the community.

And if anything happens to someone, it's practically like holding someone's life in your hands.

>> Nicole, she's kind of a strict lifeguard.

>> No running!

>> Part of the money that keeps the pool open is from sales taxes, utility taxes, and property taxes.

>> Hey, if we didn't have taxes, we wouldn't have this pool.

>> So if the pool wasn't supported by taxes, the pool might not be here, and I wouldn't have a job.

>> Woo hoo, W4!

>> This is the W4 form given to you by your employer when you're first hired.

When you fill this out, it tells your employer how much taxes are taken out of your paycheck.

>> My job is tax-supported, and I pay taxes, too.

This is my paycheck.

I get it about every two weeks.

And right here shows the gross pay for the amount of hours that I worked.

Here shows the tax deductions.

>> Taxes are the greatest thing ever invented.

>> And after everything is taken out of my paycheck, this is the net pay that I eventually get to take home and hopefully put in the bank and not spend it all.

>> W2, woo hoo!

>> This is my W2 form.

On this side it shows how much I've made for the year, and on this side it shows how much taxes were taken out of my paycheck.

This form is given to me by my employer, and with this information I can fill out my 1040 form.

>> This is my 1040 form my dad helped me fill out last year.

And check this out!

I got $160 back!

Paying taxes are like a big piggy bank.

You put in a whole bunch of money, and it goes to the greater good.

>> You know something?

I like tax supported swimming pools.

>> Your tax dollars at work.

>> Taxes are the way our government collects the money to run our civilized society.

>> And everyone benefits.

>> Part of our taxes pay for national defense.

>> Police and fire protection.

>> Taxes also pay to help ensure that we live in a safe and healthy environment.

>> Taxes pay for hospitals.

>> Highways.

>> And a clean water supply.

>> Taxes pay for the arts and our national parks.

>> Taxes also help fund programs for people in need.

>> The poor.

>> The disabled.

>> Then, of course, taxes also pay for disaster relief.

>> Space exploration.

>> Foreign aid.

>> Prisons.

>> Mass transit.

>> Education.

>> Farm conservation.

>> Airports.

>> And my favorite, automobile safety testing.

>> Just to name a few.

>> Taxes even pay for the regulation of television, so don't swear or have a wardrobe malfunction.

>> Can you imagine if this show had a wardrobe malfunction or someone swore?

Like I'm going to take off my shirt and say... >> It's difficult to walk the streets of The Taxless Zone.

After all, there are no streets.

There are no taxes to... >> The highway construction program initiated by Ike is the big... >> Hi there.

>> Hey, how's it going?

>> We've actually got a construction zone here.

See, we're widening the road to four lanes then adding an overpass.

>> Oh, really?

>> Yeah, yeah, we've been at it about a month.

>> And who's "we"?

>> Me, actually.

Uh, not much tax money this year, so we've had to cut back on some things.

>> Like construction crews.

>> Yes, yes.

On this project, I am the crew.

>> So what you're telling me is you're going to widen the roads... >> Uh-huh.

>> ...put in an overpass... >> Yeah.

>> ...all by yourself with that shovel.

>> Yep, pretty much.

You know, not very much tax money, so couldn't afford any equipment.

I'm thinking we'll be done in about 28 years.

>> 28 years?

>> Yeah, well, longer if I'm talking to you guys.

So, if you could hold this, I've got to dig the ditch.

>> Yo, dog.

I got this tax bill and I don't know what it's for.

>> A tax bill, hmm?

I'm on the case.

That tax bill pays for your sidewalk.

>> Wha?

>> I was waiting for my tax refund so I could pay my phone bill.

I needed to call my mother for a short-term loan, but I was having trouble getting through to her.

>> Excuse me.

I need a detective.

>> Well, today's your lucky day.

You just happened to walk into a detective's office, and I just so happen to be a detective.

>> I think I'm being extorted by my phone company.

>> What's the trouble?

>> Well, you see, my phone bill is $65 a month.

>> No kidding?

That's a crime.

>> No, actually, it's a pretty good deal.

I get unlimited minutes and unlimited data.

The problem is I signed up for a $65 a month plan, but when I got my first bill, it was for $74.77.

I need you to get to the bottom of this.

>> Normally for a funny phone bill I would call in some favors, but seeing as my line was out, this time I'd have to do some old-fashioned detective work.

I made my way to the accounting offices of Vera's phone company.

What I discovered blew my lid.

It wasn't just Vera paying more than the advertised price.

It was everybody.

It turns out the advertised price does not include a state and local sales tax, money for the Federal Universal Service Fund, money for the ability to make 911 phone calls, or a city utility users tax.

>> So it all comes down to taxes, you say.

>> I say.

Say, why don't I give you a call sometime?

>> For what?

>> All of this fiddle-faddle about balance sheets, depreciation, taxes, just confuses me.

>> There are a number of ways our government taxes us.

>> But mostly it comes down to sales taxes, property taxes and income taxes.

>> Sales tax is a percentage of the cost of what you're buying added to the price.

>> Whether you're buying a candy bar, computer or kaleidoscope.

>> Did you say kaleidoscope?

>> Like most taxes, sales tax is based on a percentage.

So let's say that the sales tax is 9.3 percent.

>> If you're paying for a candy bar that costs one dollar, you'd be paying about nine cents in sales tax.

For a $10,000 car, it'd be $930.

>> Oh, so what about the kaleidoscope?

>> Come on, man, let it go.

>> Property taxes are our local government's main source of revenue.

That's how to pay for new schools, police, sanitation, things like that.

>> I do know that each state taxes property differently.

>> As you get older, you'll run into another kind of tax-- income tax.

>> That's a tax on your salary as an employee working for the Man.

>> Wait.

What if you want to start a business?

Are they going to tax you on that, too?

>> Yeah.

>> Oh, my.

>> But only if you make a profit.

If there's a loss, no taxes.

>> Oh, well, that's fantastic, because I have this great business idea.

>> Oh, yeah?

Tell us about it.

>> Yep.

It involves kaleidoscopes, because they're awesome.

Obviously.

>> From Biziversal Pictures.

>> It happens once a year.

You can hear it coming.

You can run, but you can't hide from... >> April the fifteenth!

>> Don't be late!

This film is rated T for Taxes.

From Universal Pictures.

(gibberish) There you go.

>> I make art, and I do my taxes.

I was 15 when I started blowing glass.

I found a glass shop in my home town growing up, and I basically bugged the owner for about two months before he gave me a job.

And then he taught me how to gather the glass and pick up color... glass blowers say pick up color.

I didn't really start off doing one thing in particular.

I was really raised by a bunch of different glass blowers doing all different kinds of things and different styles.

It took me about five years of learning with a lot of different artists before I felt comfortable with calling myself a glass blower.

I work with so many different people and do such different things.

You know, one day I'll work on making goblets, and the other day I'll help my friend sculpt skeletons, and the next day I'll be out here making balls and teaching classes.

Right now I've got about six different jobs, all in glass.

I get paid to be a glass assistant, so what I'm doing is I basically work for different artists who need assistance making their work.

As a freelancer working for other glass artists, they pay me, and I receive a 1099.

So when I make my money, I make sure to put a little aside for at the end of the year when I have to pay my taxes.

I have a bank account that is primarily used just to put money aside for my 1099 taxes.

It's very, very important to put money aside when you're being paid by a 1099 employer.

One year I didn't put money aside when I had a 1099, and at the end of the year, it was a little bit difficult for me to scrape up cash.

I think if you make a mistake blowing glass, it costs you a lot less than if you make a mistake doing your taxes.

The way that I usually put my taxes together is I'll...

I'll get all my 1099s, and then I'll go online or use TurboTax or, you know, one of those online Web sites to kind of help me figure out all the paperwork and put it all in order to make sure the money gets to the right place, I guess.

I have used TurboTax in the past, and it has definitely made my life a lot easier.

Basically just have the computer do it for you.

No one likes paying taxes, but if you don't, you'll be under fire by the IRS.

>> The IRS or Internal Revenue Service is the bureau in our government responsible for collecting taxes and enforcing the tax codes.

>> The main source of revenue is a tax on earnings, also known as an income tax.

Every April 15 the bill comes due.

That's when we need to pay for the balances that we owe, or file a refund if we've paid too much.

>> I heard that the IRS processes hundreds of millions of tax returns ever year and collects more than two trillion dollars.

>> Two trillion?

>> That's like two thousand >> That's a lot of billions.

>> Or two million million.

>> A two followed by 12 zeros.

>> it takes a lot to run a civilized society.

Which reminds me-- I haven't finished my taxes yet because I can't figure out which form to use.

>> Try the 1040-EZ.

>> EZ?

Is that because you think I'm dumb?

>> No.

>> No, it's for less complicated taxes.

But you are dumb if you don't file your taxes on time.

Oh.

Lady Na Na.

I love this chick.

>> ♪ It's super easy you say I just need the 1040 EZ ♪ Paying your taxes is the civilized way.

♪ It's especially important on tax day... ♪ >> Spatulatta is a webcast for children.

It teaches other kids how to cook.

It is aimed directly at children.

>> So now we're going to take our pie out of the oven.

>> All right, let's check it out.

Don't forget your mitts.

>> Oh, there we go.

>> The Web site name is Spatulatta.com.

>> As you go into the Web site, we have all these different recipes, and we have segments and themes.

>> Now we're going to make some lemon basil chicken.

Be careful what you're doing with your... >> And then on the side is the recipe, and you can print it out.

Spatulatta.com won the James Beard award for the best webcast.

>> It's a really prestigious award in the cooking industry, and we were so honored to win it.

And after we won the James Beard award, a lot of people wanted to make a cookbook with us.

>> First when the cookbook came out, we got royalty checks.

You know, when you make money, you unfortunately have to pay taxes.

Actually, my mom made a mistake in the first year, and ended up having to pay more.

This year we're ready for it.

We are filling out our own federal tax forms this year.

We're going to fill out the 1040EZ which is a federal tax form for people who make under a certain amount of money, and they just have one form of income.

We pay taxes because we earn money.

The more you earn, the more you pay.

>> This is the 1040EZ.

It's just this one page.

So up here's the section where you identify yourself-- name, address.

And then there's a little space for your social.

There's only three sections here.

The first one's income.

Then we go down and see, did you already pay the government?

Anything go to the IRS at this point?

And at the end, we figure out, does the IRS owe you money or do you owe money to the IRS?

So I think this year you owe money to the IRS.

>> Three simple steps.

One sheet of paper.

So simple.

So easy.

Hey, Biz Kid$, filling out a 1040 EZ form... >> ...is easy as pie.

>> Hey, kid, can you help me out?

>> Oh.

Hey there, Bigfoot, long time no see.

>> For the thousandth time, it's Sasquatch, okay?

Look, it's almost April 15.

I gotta pay my taxes.

Can you help me out?

>> Sure thing there, Sasquatch.

But, uh, what do you want to pay taxes for?

You live in the forest.

>> I live in a national forest protected by money from taxes.

>> Oh, okay, so taxes help pay for the forest which you hide in.

>> Exactly.

I see taxes and the forest as a win-win situation.

>> Okay, but where did you get money to pay taxes with in the first place?

>> Good question.

I get a royalty every time that blurry, out-of-focus video is shown.

But most of my money comes from my Web site.

>> Web site?

>> Yeah, I'm a global phenomenon.

Huge in the Himalayas.

Anyway, April 15 it's gotta be in.

>> Sure thing, Squatch.

By the way, have you seen this new phone of mine?

It is just... >> No pictures!

>> Sooner... >> ...or later... >> ...but probably sooner, you're going to have to pay a tax.

If you have a job, that's called an income tax.

>> From a tax planning perspective, the big question is, who's the boss?

>> People say I'm bossy.

>> Okay, we're not talking about the way you act.

When you started your job, did you have to fill out a W4 form?

>> Yeah.

>> Okay, so you're not the boss.

You work for an employer who takes taxes out of your paychecks.

So in January you'll get a W2 form, and you'll probably have to use a 1040 EZ form.

You might even get a refund.

>> What kind of tax form do I use?

>> Well, who's the boss?

>> I own the business, so I'm the boss.

>> Okay, well, I have good news and bad news.

The bad news is that, since you don't have an employer taking out Medicare and Society Security taxes, you have to do it yourself.

That's called a Self Employment Tax.

>> You estimate what you owe, and you pay quarterly.

>> And the good news?

>> Well, since you own your own business, you can deduct business expenses from your annual taxes.

>> Can I deduct my car and my computer?

>> Yeah, as long as it's legit, absolutely.

Just like any other company.

>> Just so you know, the form you'll be using is the 1040 Schedule C, or the Schedule CEZ if you don't make that much.

>> I like being the boss.

I can be bossy.

You, you're fired.

>> Hawkins wants to see you in his office right away.

Gee, I hope the next guy they get is as nice as you, buddy.

>> Oh, thanks, Gillis.

I... what do you mean the next guy?

>> I'm the boss.

>> Take it from Capitalist Peg here.

When it comes to taxes... >> Hey, Peggy-Peg.

>> Eh.

Speaking of tacky.

What is it Brian?

>> I forgot to pay my taxes.

I was wondering if I could have a small loan?

>> Brian, again?

You've gotta pay your taxes on time.

>> If you don't file your taxes right, the IRS will sock it to you.

>> Oh, I get it.

Socks.

>> I'm Riley.

>> I'm Jake, and the company we run is Sea Town Lax.

>> Sea Town Lax is a sock company.

We started in high school and we designed crew socks.

>> For mostly lacrosse players, but now a lot of basketball players.

We sold them to volleyball teams.

There's a lot of other different sports.

>> Now we sell them wholesale to stores, so we sell through retail stores, and we sell them online.

But we also travel around and sell them directly to our customers.

>> We came up with it in my partner Riley's car.

>> We sat there and go, "You know, we're coming to the end of our high school days, and we've always wanted to start something," and sat there for about five hours and thought up the idea of socks.

And we acted on it.

>> We could do... we could do socks.

>> I think that's the way to go.

>> I think we should do it.

Let's do it.

>> All right.

>> Our first prototype we got a sock, and started drawing on it.

I actually have it here with me.

You can see this.

This is literally a sock out of our drawer.

>> This is pretty much where it all began, is this sock right here.

>> We really had no plan of action when we very first started.

It was kind of like, all right, we got the socks.

We're going to sell them.

So... and I mean, keeping records, any accounting stuff, that was all like, "Eh, we'll worry about that later."

>> The first time that we owed taxes, we had no idea what to do.

>> When you're starting a business, you're thinking about the exciting things.

You're not starting a business because you're excited to file paperwork and pay taxes.

You start your business because you're excited about the product or the service that you're about to provide.

>> We ended up actually just calling the IRS Web site.

I mean, they were actually super friendly.

You think of like the big scary IRS.

And they kind of just walked through the steps that we needed to do and what we need to do in the future as well to really make sure we do it right.

>> That was kind of the eye-opener, when we actually looked in, the first time we actually paid taxes.

Like wow, yeah, we don't really want to have to call the IRS every time we pay taxes.

Because there's things you can do along the way that make it easier to pay taxes when the due date comes.

>> Moving forward, and once we started really doing well, we realized that, you know, from a business standpoint, you've really got to keep these records.

But especially from a tax standpoint, it's really, really important to know where the money's coming in, where it's going out, what you owe to the government for sales tax and the various other taxes you have.

>> You know, keep track of all your receipts and know what you have to pay right from the get-go.

It'll make it ten times easier when you've got to pay your taxes.

>> And if you really want to run a legitimate business that's got a future, it's just something you got to do.

>> To play the game of business, you've got to pay your taxes.

>> Let's go, sock-boy!

We don't got all day!

>> Our king needs money, so we've decided to tax your tea.

>> Oh, really?

Well, what are we getting in return?

>> Oh, in return.

That's a good one.

Uh how about a medal with the face of our king on it?

>> Well, that's not fair!

We quit your country!

>> What?

Oh, dear!

Oh!

>> Time-Traveling Paramedics!

>> Who are you?

>> We're the Time-Traveling Paramedics.

>> Clear!

She'll be fine.

>> How did you do that?

>> Through tax dollars.

After this little skirmish, these guys invent the EMT system using tax dollars raised by all who are represented.

>> Eventually millions have access to emergency services.

>> Which leads to development of the time machine.

>> There were a few bugs at first.

>> But they were all ironed out back in 2027.

>> What a civilized thing for such a young colony to do.

>> Not colony.

Country.

>> You mean we win?

>> Not to give anything away, but, yes.

>> Oh!

>> We're needed at the great Chicago fire.

>> Time-Traveling Paramedics!

>> What the heck is a Chicago?

>> Hi, I'm Sky.

I'm 16, and I plan for taxes.

Most people just call me Sky.

I started skating professionally mainly because there was nowhere else to go.

I got invited by a friend of mine to go down to the Oregon Trifecta, which was my first pro contest, at the age of nine years old.

I instantly fell in love.

I knew it was something I wanted to be a part of.

I got my first paycheck actually at the Oregon Trifecta.

From then on I just was looking for the next session.

As a pro skater, I'm self-employed.

So I have to keep track of my own taxes and how much I earn and how much I spend.

My mom luckily taught me a lot.

This is my mother.

>> Hey.

>> She helps me a ton planning taxes.

>> He started earning money, realized that it was real important for him to learn how to handle that.

And I said, "Okay, first thing we've got to do is open you a business account."

>> I ended up started a business account at the age of 12.

My mom actually introduced me to Jim, my CPA.

Jim's a good guy.

An accountant is definitely somebody you want to have around just to make sure you've got everything straight.

>> One of the most important aspects of having your own business is making sure you keep track of all your expenses.

He is allowed to deduct anything that relates to his business.

>> Travel expenses, food.

Pretty much everything that I spend to get to the contest.

I have to keep receipts.

If I go to a restaurant, I grab the receipt, stuff it in my pocket, and hope that I don't wash my pants.

>> That documents expenses that he's able to deduct as well as what is income to him.

And he's only going to be able to get a tax deduction for those expenses that he's able to document.

>> I actually keep track of my winnings online at World Cup Skateboarding's Web site.

They post the results from each contest and say how much each athlete won.

So that's a real help in case I forget.

Also, I keep track of travel expenses like booking flights and hotels.

This plane ticket cost me $139 that I will be deducting from my taxes.

There's a lot of tax softwares that you can get, but for now I've just been using paper folders.

So right here is my little file.

I keep everything organized by month-- plane tickets, rental cars, hotel receipts.

And if I'm not paying with a credit card, I'm paying by cash, I have to keep hard copies of receipts.

Throw it right in here.

As soon as I've got all this organized, I've got to organize it into this file for Jim.

This is a 1040, a Schedule C which I have to fill out because I'm self-employed.

It's kind of funny.

Occupation-- skateboarder.

As soon as I'm done with all this, I do the handoff to Jim so he can make it even more professional looking and hand it over to the IRS.

He makes me look even more organized.

>> So when it comes to tax planning, the better Sky keeps his records, the easier my job is.

>> Texas?

>> No, taxes!

>> Texas?

>> Taxes!

>> Oh.

Texas.

>> Let's face it.

Taxes have a bad reputation.

>> Maybe that's because they're inevitable.

Obligatory.

>> Unavoidable.

>> Inescapable.

>> Overwhelming.

>> Unpreventable.

>> Required.

>> Non-negotiable.

>> Mandatory.

>> Demanded.

>> Essential.

>> Inexorable.

>> Sanctioned.

>> Imperative.

>> Vital.

>> Compulsory.

>> Fundamental.

>> Okay, so basically, when it comes to taxes, you have to pay them.

But that's not necessarily a bad thing.

>> No, because taxes pay for things that we all need.

Like modern hospitals, new schools, and public transportation.

>> And things we want like hiking trails in national parks and, well, you know, Public Television.

>> And they also pay for things that we don't necessarily want to talk about, like sewer systems-- truly the mark of a civilized society.

>> Hey, there's a backup at the treatment plant.

>> Looks like we're going to have to raise taxes.

>> You know, I think I'm going to leave this place.

But I don't see any road signs.

>> ♪ You say I just need the 1040 EZ ♪ Paying your taxes is the civilized way ♪ It's especially important on tax day, day ♪ It's no excuse that you're busy, busy ♪ Now that I'm done I can go play ♪ It's super, it's super it's super easy ♪ You say I just need the 1040 EZ.

♪ >> No, taxes!

>> Taxes!

>> Need some more bites of Biz?

>> Check out our Web site.

>> If you have your own business, we'd love to hear about it.

>> Plus, we have resources that can help you.

>> Just click on BizKids.com >> And let's get down to business.

>> Some Biz Kids business.

>> Production funding and educational outreach for Biz Kids is provided by a coalition of America's credit unions, where people are worth more than money.

A complete list of individual credit union funders is available at wxxi.org.

>> Every day, America's credit unions help members with their financial needs and with programs like Invest in America.

It's only fitting that credit unions support Biz Kids because financial education is what we do.

Learn more at lovemycreditunion.org.

Captioned by Media Access Group at WGBH access.wgbh.org