Busted! Don’t Believe These Tax Myths!
When tax season approaches, people are often left in the same chaotic environment as they try to file taxes and understand which tax deductions and exemptions they qualify for. Unfortunately, during this time, people often encounter a wave of myths that often add to their stress and confusion. From what you can claim to who can file, these myths make it difficult for people to reduce their tax burden and may even risk the chance of an IRS audit.
To shed light on the truth and help you get the most out of your tax returns, Collins, Associates & You - The Tax Trio has debunked three of the most widely believed myths about taxes.
Myth 1: Itemizing deductions saves you a ton of money
When you file your taxes, you get to take a standard deduction. However, some choose to take an itemized deduction and “save money” because so many people believe that you’re saving a lot of money on taxes. While this may be true, in some cases, you may not be saving as much money as you think. You either get an itemized deduction or the standard deduction, whichever is greater. What you’re saving is the difference between the standard deduction and the itemized deduction. Also, the deduction only reduces your taxable income, not the taxes due.
Myth 2: You shouldn’t pay off loans with tax-deductible interest
People often debate about whether they should or shouldn’t pay off loans early, such as a mortgage or student loan, because the interest is tax-deductible. If tax-deductibility is the only reason you’re contemplating not paying the loan off early, you may want to reconsider.
Myth 3: Filing taxes are a choice
It’s surprising how many people still think that filing takes are “voluntary”. Choosing whether or not to file your taxes is not an option you get to make. The decision is based upon the requirements of who needs to file taxes. Did your taxable income exceed the threshold for that tax year? It’s different depending on the type of income you have, your age, and your filing status.
If you need professionals to assist with the tax filing process and help you figure out which tax deductions you’re entitled to, reach out to Collins, Associates & You - The Tax Trio.
As a full-service accounting firm in Orem, Utah, we offer excellent tax preparation for individuals and businesses, expert bookkeeping, and full payroll services. We also offer knowledgeable assistance if you are ever audited by a taxing authority for income, sales, or payroll taxes.
For more information about the services we provide, please click here. If you have any accounting or tax-related questions, we would love to hear from you. Please contact us here.