7 Common Tax Myths, Busted!

“Believe nothing you hear and only one half that you see.”

The above saying holds true, especially when it comes to tax-related information. Fake news and myths might be getting a lot of attention and making headlines, but you cannot choose to believe everything you hear. There is quite a lot of misinformation out there pertaining to filing taxes, and following them blindly might get you into trouble.

Read on to recognize some of the most common tax myths and misconceptions and learn to distinguish fact from fiction.

TAX MYTH 1: BUSINESS TAXES AFFECT ONLY BUSINESS OWNERS

It’s widespread misinformation that businesses bear the complete burden of taxes. While that makes sense, workers also take a significant portion.

Empirical studies report that workers bear over 50% of the burden of corporate income tax, and the remaining is split between the U.S. Department of the Treasury, Congress’s official tax scorekeepers, the Congressional Budget Office, and the Joint Committee.

TAX MYTH 2: TAXPAYERS SHOULD WAIT UNTIL THEIR 2020 RETURN IS PROCESSED BEFORE FILING THEIR 2021 RETURN, ELSE ALL REFUNDS WILL BE DELAYED

The IRS has clarified that taxpayers need not wait until the 2020 return is completely processed in order to file their 2021 returns. It is best to file whenever you are ready, and individuals with unprocessed 2020 returns should enter $0 (zero dollars) for the previous year’s AGI on their next tax return when they file tax returns electronically.

TAX MYTH 3: GETTING A REFUND THIS YEAR MEANS YOU DON’T NEED TO ADJUST WITHHOLDING FOR 2022

This isn’t true. The IRS clarified that taxpayers should make changes to prepare for next year. You can adjust your tax withholding with your employer and use the Tax Withholding Estimator tool to determine if your employer is withholding the right amount. In case you are going through life events such as marriage, divorce, childbirth, or adoption or aren’t able to claim an individual as a dependent, you should check their withholding. Given how withholding takes place throughout the year, it is essential to do this soon.

TAX MYTH 4: FILING FOR AN EXTENSION UPS YOUR CHANCES OF GETTING AUDITED

Experienced practitioners suggest that an extension could instead reduce your chance of an audit. It is recommended that you file a complete and accurate return on an extension than a rushed, sloppy one simply to meet the deadlines. Filing extensions are pretty straightforward, and there is no explanation asked for, as the IRS understands that there are legitimate reasons why a taxpayer is requesting more time.

TAX MYTH 5: TAX PREPARERS ARE HELD RESPONSIBLE FOR MISTAKES ON YOUR RETURNS

As easy as it can be to blame your tax preparer, it is actually the taxpayers who are legally responsible for all the information provided on your tax return. Even though professional tax preparers are better informed on the tax codes and their ever-evolving nature, experts say, they are still constrained by the data you provide them. But at the same time, if a tax preparer carries out any fraudulent actions, you do have legal recourse against them.

TAX MYTH 6: PAPER RETURNS ARE THE MOST SECURE WAY TO FILE TAX RETURNS 

 Absolutely not! In fact, the IRS encourages taxpayers to file online. Amongst the several reasons why digital is better than paper filing, security and speed are the main advantages. There are chances that tax scammers will try to intercept paper returns and utilize the information to steal a taxpayer’s identity. There is also another possibility that the IRS might lose your return as well. While a paper return could take about six months or more until you get the refund, you will receive your refund within 21 days when you file accurate returns electronically. 

TAX MYTH 7: PROFESSIONAL TAX PREPARERS CAN GET YOU A BETTER REFUND DATE

Getting in touch with a tax professional will in no case advance a refund by any chance. In reality, tax preparers cannot move up your refund dates given how they do not have the access to any special information pertaining to the same. It is best to use the Where’s My Refund? tool to get accurate and timely information regarding tax refund dates. 

WRAPPING UP

File your taxes with confidence or delegate them to the best professional tax preparers who will efficiently keep up with the deadlines while guaranteeing maximum refunds. To avoid falling prey to such myths and misinformation pertaining to taxes, it is best to follow IRS Statements and Announcements.