Most Americans have their tax returns prepared by someone else. To a degree, this causes apathy in the thinking processes of some taxpayers, and they are quick to attach themselves to misconceptions and disinformation about income taxes and income tax filing. Let’s dispel some of the myth in the next few moments.
Full time students are not exempt from filing an income tax return. Your status as a student entitles you to some tax credits, exemptions, and deductions, to be sure. It does not, however, exempt you from having to file an income tax return. If you earned enough money, about $8900 as a single individual or $17,800 as a married couple, you have to file.
All married couples are not required to file jointly. There is also the filing status of married filing separately. You should check with a tax professional in order to determine which status is best suited for the needs of you and your spouse.
When you file does not impact your chances of being audited. Whether you file early or late, it will not impact your chances of an audit, as long as you file in time.
Even though taxes were withheld from your paycheck, you still have to file a return. The withholding of your taxes does not exempt you from filing. Most Americans have tax withholding or pay estimated quarterly taxes.
Tax deductions are only for the rich. Unbelievably, this is still a widely held misconception. There are tax breaks for almost every level of income. If you are not itemizing deductions, you are just too lazy to save money. Talk to a tax professional about how itemizing deductions can save you money.
Even if you cannot pay the full amount you owe, you should file your return. You can work out a payment plan with the Internal Revenue Service much more easily if you come to them with an offer, rather than waiting for them to come to you.
If you owe and know you can’t pay, you should contact a tax resolution firm to help you negotiate a deal with the IRS. Otherwise, penalties, fines, and interest will begin to accrue on your back taxes beginning on April 16. These penalties, fines, and interest will continue to grow until you have made your payment in full to the IRS. If your tax burden is too high to pay now, it will only get worse as all these amounts attach to your back taxes.
Taxes are most misunderstood amongst people. Ignorance or wrong conceptions will result in excessive payment of taxes or penalties for underpayment. Chintamani Abhyankar explains some misconceptions and the realities behind.