01/01/2025
Here are some common tax myths debunked:
1. Myth: "I don’t have to file taxes if I didn’t make much money."
Busted: Even with low income, you may need to file, especially if taxes were withheld or you're eligible for credits like the Earned Income Tax Credit (EITC).
2. Myth: "A tax refund means I paid no taxes."
Busted: A refund means you overpaid taxes during the year; it doesn't mean you didn't pay any taxes.
3. Myth: "I can write off all my meal and entertainment expenses."
Busted: The IRS limits meal deductions to 50%, and most entertainment expenses aren't deductible at all.
4. Myth: "Filing an extension means I can pay later."
Busted: An extension only gives you more time to file, not more time to pay. Any taxes owed must be paid by the original deadline to avoid penalties and interest.
5. Myth: "I’m too young to pay taxes."
Busted: Age doesn’t exempt you from taxes. If you meet income thresholds or earn investment income, you may need to file.
6. Myth: "The IRS will call me if there’s an issue with my taxes."
Busted: The IRS generally communicates by mail, not phone. Calls or emails claiming to be from the IRS could be scams.
7. Myth: "I don’t need to report side gig income."
Busted: All income, including side gigs, freelancing, and tips, must be reported, even if paid in cash or via apps like Venmo.
8. Myth: "Only the wealthy get audited."
Busted: While higher earners are audited more often, anyone can be audited, especially if there are errors, inconsistencies, or red flags in their return.
9. Myth: "Hiring a professional guarantees I won't be audited."
Busted: A professional can help you file accurately, but audits are sometimes random. A professional will, however, guide you through the audit process if needed.
Would you like more on a specific tax myth?