5 Common Tax Myths That Are Destroying Your Future (And What The Truth Actually Is)
Unfortunately, in the age of the internet, misinformation is everywhere. The same is true of tax myths. Some common tax myths do have an element of truth to them, but they’re not 100% accurate.
And, not only will we debunk these tax myths, but we’ll let you know the truth.
When we’re working with our clients, we frequently hear tax misinformation. So, we decided to round up the top 5 tax misconceptions we’ve heard here at TaxRise.
1. Only People With A High Income Can Be Audited
As a tax relief company, we can’t tell you the number of times we’ve encountered clients that believe they’re immune to IRS audits.
To be fair, there is an element of truth to this. Those with a higher income usually have to file more tax forms, which increases the odds of mistakes occurring.
However, if you’re in the low to average income bracket, this doesn’t mean you can slack on filing your taxes. Especially now, with the Inflation Reduction Act increasing the amount of IRS agents by 87,000, your odds of being audited are as high as ever.
If you have unfiled tax returns and you owe back taxes, check out TaxRise’s free tax consultation. We understand how paralyzing dealing with the IRS can be, and we ensure the best possible tax resolution for you.
2. Filing Taxes Is Voluntary
Though there are very few exceptions, such as some teenagers, everyone must file taxes if they work.
Failing to pay your taxes is a federal crime! Unless you’re purposefully evading taxes, then you won’t go to jail. However, since it’s illegal, heavy penalties and interest will start accumulating.
This is a vicious cycle we see so many of our clients get caught up in. Of all common tax myths, this one is particularly harmful, as it perpetuates a misconception that can bury you in tax debt.
3. Social Security Is Tax Free
Unless you meet certain requirements, social security is taxed. Though retirement can be tax-free, if you’re planning to use social security as a fallback, make sure you understand how social security is taxed.
Retirees with total incomes exceeding $25,000 as individuals or $32,000 as married couples filing jointly, must pay income taxes on their Social Security benefits. Social security benefits are not taxed if one’s total income is below these levels. Additionally, social security isn’t taxed if this is your only source of retirement income.
What does this mean for you?
This means you need to have an additional retirement income, such as pensions, IRAs, and 401Ks. For most, just social security income won’t be enough to live on.
Check out this article to know what percentage of your social security will be taxed. (Hint: it’s a lot more than you think). Don’t let this tax myth wreck your retirement.
4. You Can Claim A Home Office Deduction As An Employee
This is yet another common tax myth we see at TaxRise. It’s well known that the self-employed can deduct a certain amount for their home office. So, many employees assume that they can do this as well since they’re working from home too, right?
Well, not exactly. Though a more complicated issue than the scope of the article, we can give you some general information below. If you need information more tailored to your situation, please feel free to contact us at: 833 – 419 – RISE (7473).
As an employee, there’s a condition that must be met: an employee’s home office must be for an employer’s convenience. In other words, working from home must benefit your employer more than it does you.
A home office must be:
- A condition of employment
- Necessary for your employer’s business to function properly, or
- Is necessary for you to do your job
If you have the option to work from an actual office, you don’t meet this criteria.
5. Your Tax Preparer Is Responsible For Any Errors
If you hire a tax preparer to file your returns, it goes without saying that you expect everything to be accurate, up to date, and require you to pay the least amount of taxes you’re obligated to pay.
Unfortunately, tax preparers are human, and tax errors can — and do — happen. What do you do if this situation happens to you?
Well, the tax preparer can be held responsible, depending on how serious the mistake was. For instance, for mistakes the IRS deems as careless, the tax preparer would incur penalties.
If this situation happens to you, then the first step would be to bring it up with your tax preparer. Most mistakes can be fixed with an amended tax return, and your preparer may even pay the penalties and fees out of their own pocket!
However, this doesn’t mean your tax preparer is always held liable. If it turns out that you gave your tax preparer inaccurate information, then you will be on the hook for any fees and penalties.
Taxes are complicated, but they don’t have to ruin your life. Many people fall prey to these common tax myths each year.
TaxRise has helped thousands of American taxpayers just like you resolve their tax issues and erase their tax liability.
We help advocate on your behalf to the IRS. We save you stress, time, and money.
If you don’t know which tax resolution best suits your needs, check out TaxRise’s free tax consultation. From this quick call, you’ll be able to determine if you qualify for our services and which tax relief program will work best for your unique situation.