5 Common Tax Myths Debunked College Student

5 Common Tax Myths Debunked

Myths surrounding income taxes are as common as mosquitoes this time of year. Everyone wants to save money (we want you to save money, too), but people have a habit of believing these myths and getting into hot water with the IRS or State of Maryland. Some of these tall tales are actually rooted in fact, but most of them are pure fantasy. Keep reading to learn about the most frequent myths we hear at S.H. Block Tax Services, as well as the origin of each and whether there’s even a shred of truth to the fiction.

1. Taxpayers Can Claim Pets as Dependents

If only this were true. Unfortunately, you can’t claim your pet as a dependent, and we’re not sure how this myth ever gained traction since it’s never been true. While our pets certainly depend on us and can cost quite a bit to care for, the U.S. government only considers humans as dependents for tax purposes.

However, you can write off pet-related expenses under special circumstances — for example, if you own a guard dog for your business or a service animal to help with a disability. And since you can write off certain specific expenses, people naturally began spreading a benign rumor that eventually snowballed into a full-blown tax myth.

2. Only Wealthy People Get Audited

The IRS claims their auditing process is random, but the fact is that people making over $100,000 are much more likely to get audited. So, there’s a bit of truth to this myth, but wealthy people are definitely not the only individuals who are subject to audit.

Every year, about 1 out of every 100 taxpayers who make less than $100,000 receives notice of an audit from the IRS. The good news is that if you keep detailed records and fill out your tax forms as accurately and honestly as possible, you should have nothing to worry about.

RELATED: When Should I Contact a Tax Representative?

However, even minor mistakes on a tax return can result in a balance owed. And in many cases, it pays to have a buffer in the process who can provide professional tax advice as you go through the audit process.

3. The IRS Will Call or Email You

If you ever receive a phone call, email, or any correspondence other than a letter from someone claiming to be an IRS representative, you should contact the authorities immediately because this is likely part of a scam. Obviously, con artists are at the root of this myth, which makes it especially dangerous for taxpayers.

If you owe taxes or there’s an issue with your account, the IRS will almost always attempt to resolve the matter through the mail. This means that if you’ve recently moved and haven’t updated your address, you should do so soon to avoid missing important correspondence, which could result in penalties or fees.

4. Students Don’t Have to Pay Taxes

In some respects, this isn’t a myth. Students who earn more than $10,150 in 2018 are legally required to file income taxes, even if they were full-time students during the tax year. On the other hand, students who earn less than that threshold are not legally required to file, although they should if they anticipate a refund (which is likely at that income level). In addition, many students are eligible for school-related tax credits, like the American Opportunity Tax Credit. We hate to blame everything on millennials, but it would seem this particular myth gained traction among students who prefer the tap room to the classroom.

5. An Extension to File Equals an Extension to Pay

This is one myth we hear often, which is unfortunate because it can cause a lot of financial damage. An extension to file is just that: an extension to file. It provides an additional six months for you to gather and organize your records so you can file properly. However, the taxes you owe are still due on or about April 15 (depending on which day of the week Tax Day falls). A filing extension will help you avoid the failure-to-file penalty, but interest and penalties will still start to accrue on your unpaid tax balance immediately after Tax Day, and they’ll keep growing until you pay your tax debt in full.

S.H. Block Offers Free Consultations for All Your Tax Needs!

One thing we know for certain is that we have a sterling track record of helping individuals, families, and businesses eliminate their tax problems and re-enter compliance with the IRS and State of Maryland. If you’re currently facing any potential tax liabilities or you have questions related to your unique tax situation, please contact us by calling (410) 872-8376 or completing this brief form.

We have decades of experience dealing with tax-related legal issues, and we’ve earned an A+ rating with the Better Business Bureau after helping thousands of taxpayers eliminate their debt and get back into compliance with the IRS and State of Maryland. We offer free, no-obligation consultations, so please reach out today!

The content provided here is for informational purposes only and should not be construed as legal advice on any subject. Please read our full disclaimer here.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *