Love it or hate it taxes are something you have to deal with yearly. Although taxes can be a burden on as all, there are some myths surrounding it that might leave you with questions on whether or not those myths might be true.
Here are 5 common myths about taxes that you might have thought of as true.
Myth 1: Filling Taxes is Voluntary
You are supposed to file your taxes every year. When you don’t file you are prone to late- payment penalties on the years you have not filed. If you think about it, you would be better off filing your taxes and paying the amount you owe every year rather than waiting. The longer you wait to file your taxes, the more you will owe to the government.
Sure you’ve heard of various criminals who couldn’t be caught on the actual crime but they were instead caught on tax fraud, or didn’t report their taxable income, etc. The IRS tax instructions clearly states that “income from illegal activities, such as money from dealing illegal drugs, must be included in your income on Form 1040…” Although it may sound crazy, some people do report these types of income on their tax return because they don’t want be charged for their initial crime and tax evasion.
Myth 3: Home office Deductions Will Cause Instant Audit
It’s legal to take office deductions although sometimes it’s not smart. You are required in taking home office deductions to use that space that you claim exclusively for business purposes. Like the guest room you use as an office, couldn’t be used as a guest room, or you couldn’t be doing other stuff or storing other things that didn’t relate to business. If you do take that deduction, it would be best to leave that square footage piece off and just deduct the actual expenses like furniture, computer, cost of electricity that applies to the business & not worry about that exclusive rule.initial crime and tax evasion.
Myth 4: Students Don’t Have To Pay Taxes
Some people think that the student would have to put their income in their parents tax return, and that’s not the case. There is an income level where they do have to file, but typically if any withholding was withheld from the student’s wages, they’re not going to have to pay tax anyway because their income hasn’t gone up to that level. So, they should file in order to get that refund.
Any income you make on the internet is taxable. You owe income tax on it, you could owe state tax on it and you could owe sales tax on it. Most online businesses are charging sales tax, so it doesn’t matter where you earn the income, you will probably owe tax on it.
Paying for taxes is never fun, but if you think about it it’s a blessing that you got to earn that money. If you have any questions on these myths or any others you’ve heard, feel free to contact us!