10 Myths About Tax Prep
Death and taxes being as inevitable as they are in life, there are always plenty of myths concerning them both. It’s human nature to want to get around things that are fundamentally straightforward. And while we don’t have much to tell you about the afterlife, we can tell you what you shouldn’t be worrying about when it comes to tax prep.
Myth #1. You’re better off with a big refund.
Everybody wants a big pay day, but remember: this was money you already earned. If you get a big refund, it’s likely that far too much was being withheld from your paycheck over the past year.
Myth #2. Once you get your refund, you’re in the clear.
The IRS issues the refund as an acknowledgment that your taxes were filed with the correct arithmetic. Whether or not they choose to audit you to investigate your claims is another story.
Myth #3. You’re more likely to be audited if you file electronically.
Nope. The rate is steady at under 2% for all returns.
Myth #4. Voluntary tax filing means what I wish it meant.
When the IRS uses terms like ‘voluntary’, they mean you can do your tax math yourself – not that you’re not required to pay them.
Myth #5. Taxes in the U.S. are way too high.
It may be a matter of opinion up to a point, but compared to the average, in general Americans pay a far lower tax rate than most countries.
Myth #6. Illegal income isn’t taxable.
It can seem pretty odd, but this is how they got Capone: the income he was acquiring through illegal means was still taxable. You have to account for every dollar that you earn, however you earned it.
Myth #7. I can deduct my medical expenses.
There’s a high bar for this one: it has to be more than 7.5% of your adjusted gross income, and you can only deduct the portion exceeding that figure. So if it’s 7.6%, you only get 0.1%.
Myth #8. I can take my time filing since I’m getting a refund anyway.
This one’s a surprisingly popular bit of misinformation, but there’s no truth to it at all. The due date’s the same for everyone, prince or pauper.
Myth #9. The IRS will email me to let me know if I’m getting a refund.
There’s some danger to watch out for with this one: people often receive emails purporting to be from the IRS, but the real IRS never initiates contact by email. If you receive such an email, someone is probably trying to take advantage of you by acquiring your personal information.
Myth #10. I don’t have to worry about an audit if I don’t make much money.
It’s true that people with income over a certain threshold are a bit more likely to be audited – but this is just one factor among many that can send up red flags on your return. It’s important to file correctly no matter what your income is.
Don’t forget the Back Office Support Solutions are here for all your tax needs! Contact us today!
