There’s a lot of bad information floating around the internet. For instance, the idea that you can see the Great Wall of China from space or that we only use 10 percent of our brains. Believing everything you read not only makes you look foolish, it can lead to costly mistakes. The good news is we know taxes and we’re willing to share our knowledge with you. Keep reading to find out the truth behind the most popular tax myths.
Filing taxes is voluntary
Getting married is optional. Going to college is optional. Filing your taxes? Not so much. The IRS requires you to file a tax return if your income exceeds a certain threshold based on your age and filing status. Even if you’re exempt from filing, it’s still a good idea to do it anyway. You’ll get a refund of any federal income tax withheld and you may qualify for tax breaks which can increase your refund. ezTaxReturn.com makes it easy to claim the tax credits you deserve so you get the biggest possible refund guaranteed. Pre-register now to get a discount when you file next year.
Students don’t have to file taxes
The IRS doesn’t care that you’re a student. They have a one-track mind and for them it’s all about the money. Single dependents must file a tax return if they earned more than $12,000 or have over $1,050 in unearned income such as interest, dividends or capital gains.
Married couples must file a joint return
Contrary to popular belief, you don’t have to file a joint tax return with your spouse if you don’t want to. Filing separately disqualifies you from claiming certain tax breaks but in some cases it’s still a smart move. For example, if your spouse owes back taxes, child support or student loans and you want to protect your refund. It’s also a good idea to file separately if you simply don’t trust your partner. When you file jointly, both parties are responsible for the return’s accuracy. So, if your partner decides to omit or overstate information, both of you are on the hook.
Filing an extension gives you more time to pay
This is actually one of the costliest tax filing mistakes you can make. Requesting an extension only gives you more time to do your taxes, not to pay them. If you owe the IRS and don’t pay by Tax Day, you’ll begin accumulating penalties and interest. The penalty for filing late is 5 percent of your unpaid taxes. Meanwhile, the late payment penalty starts at 0.5 percent of the unpaid tax. Both penalties can climb up to a maximum of 25 percent.
Social Security isn’t taxable
Usually you don’t have to pay taxes on your Social Security benefits if it’s your only source of income. You only have to worry when other income is involved. As a single filer, you’ll pay taxes on up to 50 percent of your benefits if your combined income is between $25,000 and $34,000. That number jumps to 85 percent if it’s more than $34,000. Married couples filing a joint return pay taxes on 50 percent of their benefits when their combined income is between $32,000 and $44,000. Once you exceed $44,000, up to 85 percent of your benefits may be taxable.
You don’t have to file if you’re unemployed
We hate to be the bearer of bad news, but unemployment compensation is considered taxable income. At the end of the year you’ll receive a form 1099-G showing the amount you were paid which you’ll report on your tax return. If you chose not to have taxes withheld from your pay, there’s a good chance you’ll owe the IRS when you file.
You must hire a professional to prepare your tax return
Many people fear doing their taxes themselves because they think they’ll get it wrong and land in hot water with the IRS. The reality is if you have a basic tax situation such as a W-2 and no dependents, you’re totally capable of preparing your own tax return. User-friendly tax programs like ezTaxReturn.com guide you through the process step-by-step and guarantee 100% accurate results. Just enter the information into the program as it appears on your forms and you’ll be good to go.
The IRS has been calling you
Despite what your caller ID says it probably isn’t the IRS on the phone. Savvy criminals have been impersonating IRS employees to scam taxpayers out of their hard-earned cash. Usually they’ll tell you that you owe money for a fraudulent bill and demand immediate payment via prepaid debit card, gift card or wire transfer. The crooks really want you to take the bait, so they’ll threaten to have a warrant issued for your arrest or your license revoked if you don’t comply. This is not how the real IRS does business. If the IRS needs to get in touch with you, the first thing they’ll do is send a letter through the U.S. mail. Leaving pre-recorded, urgent or threatening messages isn’t their style.