As the tax deadline is right around the corner, it is important to make sure that you are properly prepared for the big day. Many people are persuaded by friends and family to believe things about their taxes that are simply not true. These misconceptions can be harmful to you and cause you to turn in the wrong information when filing your tax return.
Before you believe what you were told about your taxes, verify it first to ensure that it is true and you will not be facing a fine if you do file. Below, we will go over some of the biggest misconceptions surrounding your taxes.
A Tax Extension Means You Get an Extension to Pay
One of the biggest misconceptions that people have is that if they file an extension to turn in their return, they automatically get an extension to pay the taxes they owe.
In fact, this is not true at all. You can receive an extension to file but you are still responsible for paying your taxes on the 15th of April like everyone else.
If you do not pay your taxes by the deadline, you will incur a late fee and penalty fee until the amount is paid off. Sometimes, interest is tacked on as well.
If You’re Married, You Must File Together
Many people believe that if you are married, you must file your taxes jointly. There is no law or requirement that says that you and your spouse have to file together. The reason people file jointly is because it helps to minimize the taxes you owe.
There are benefits available to those who do file jointly together and you must pay attention to child tax credits and other deductions when you file separately as you both cannot take the same deductions and credits, in most cases.
One reason many couples do file “married filing separately” is because if they file together, they may be taxed in a higher bracket and owe more money than if they filed alone.
Your Pet Counts as a Dependent
Even though your children count as a dependent, your pets do not. Whether or not you consider them your children, you cannot receive a tax break for owning pets.
The only time that a pet may qualify as a dependent on your tax return is if the dog is used for business purposes or if the dog is needed for medical reasons such as a seeing eye dog.
If you plan to claim your pet for business or medical reasons, make sure you speak with your local tax professional first to ensure that you have the right documentation and that you can legally claim your pet.
The Home Office Deduction Is Too Difficult
Many people are afraid to claim the home office deduction because they have heard stories about how someone’s tax return was rejected and so on. You should only claim this deduction if you do truly have a home office and we do not mean a computer desk in the kitchen.
If you work from home, behind a closed door where your office is setup, you can claim the home office deduction with ease. You are allotted a certain amount of square footage, electricity costs, and so on.
College Students Are Free from Filing a Tax Return
Some people believe that college students do not have to file a tax return. If you made any money throughout the year, you will need to file a tax return. Even if you only received student loans for college, you still need to file a return.
No one is free from filing a tax return unless they did not make any money throughout the year or unless they are 65 or older and only receive SSI or SSD benefits.
One of the single best pieces of advice you can receive is to do your homework when it comes to your taxes. Never rely on what an untrained or unprofessional tells you. If you are having trouble understanding your taxes or you have some questions about your taxes, make sure that you speak with a professional tax agent right away. He or she will be able to let you know if what you are doing is right or wrong on your tax return.
Financial Balance LLC