As we continue deeper into tax season, it can be challenging to follow all the changes and updates that are occurring. At Paar Melis, we are doing our best to keep you up to date on these changes and anything else you need to know.
Furthermore, it can be difficult to keep up with the rules to know what you can and can’t do during this time. We have put together a list of common tax season myths below, as well as the truths that lie behind them.
Myth #1 – If I file an extension for my taxes, then I don’t have to pay what I owe until I file my return.
If you owe money, you still must pay that to the IRS by the tax deadline. (Now May 17, 2021) If you pay after the due date then you may have penalties and interest assessed.
Myth #2 – If I am due a refund, I must file by the tax due date or I won’t get my refund.
You will get your refund that you are due, as long as you file your return within 3 years of the due date. After the 3 years your refund will be forfeited.
Myth #3 – If I file an extension, my chances of getting audited will go up.
This is not true and there is no evidence that it should be true. Most audits are random or caused by preparer error. Statistics show that chances do increase as your income increases, but not by much. If you make less than $200k per year, you have less than 1% chance of being audited.
Myth #4 – Money made online is tax free.
In the eyes of the IRS, income earned online is no different than offline. Regardless of the medium, if you sell a product or service and end up making more than $400, you are required to declare that income on your tax returns.
Myth #5 – I can claim my pet as a dependent.
Only people can be dependent, despite Fido being man’s best friend.
What other tax season items do you have questions about? Let us know!
info@paarmelis.com
301-829-4646
