Five Common Myths to Watch Out for this Tax Season

Jan 30

1. Tax refunds are free money from the government.

Unfortunately, this myth is as pervasive as it is false. Large tax refunds are like interest-free loans given from you to the government. You may have had money overwithheld from your paycheck or overpaid on estimated payments, leaving the government with an excess of your money. We recommend investing the funds or placing them in a high-yield bank account, making your money work for you.

2. Filing an extension extends my payment deadline.

Filing an extension may be helpful to those who need more time to complete the necessary forms, but it does not extend the actual date of tax liability payment. April 15 is a hard deadline (unless it falls on a weekend or holiday), so be prepared to submit your payments. Otherwise, you will incur fees and interest on your tax liability.

3. Students and part-time employees don’t need to fill out a tax return.

Every year the IRS releases filing thresholds for different ages/filing statuses. If you are filing as single under 65 but have earned more than the threshold gross income, you are required to file. It may also be beneficial to file if you have had taxes withheld, or, if you are a student who qualifies for any refundable credits such as the American Opportunity Credit or Earned Income Credit.

4. Any charitable donation counts as a deductible.

Contributions to only certain organizations are deductible. For example, contributions to political organizations are not eligible for deductions. If you are concerned about your recent contributions, check the IRS’s Tax Exempt Organization Search Tool, which identifies organizations eligible for tax-deductible contributions. Contributions to individuals also do not offer tax benefits, so any goods or services exchanged for your contribution will not count as a deductible. To ensure accuracy in the filing process, receipts, letters, and other forms of communication between you and the charity should be kept.

5. Only high earning tax payers are audited

While it is true that, statistically, more high-earning taxpayers are audited, they are not the only ones. Tax discrepancies such as mathematical errors or donations that eclipse a person’s income are some of the top reasons that could trigger an audit.

Taxes can be difficult to navigate, but Hantzmon Wiebel is here to help. We can assist you in remaining compliant with the IRS’s guidelines. Learn more at https://www.hwllp.cpa/tax

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Disclaimer of Liability
Our firm provides the information in this article for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisors. Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this blog are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability and fitness for a particular purpose.