The Most Common Tax Myths Debunked

Tax Preparation MythsMany of our newest clients at E&Y Tax Preparation Services often come to us with the same perceptions and questions. In order to help you stay more aware and on top of your taxes this year, we’ve put together a list of the most common myths that we feel should be put to rest.

Myth: My last paycheck stub will tell me all the financial information I need to file my taxes. 

This is not always true, which is why we consider it a big myth. Officially, the IRS insists that you need to file a W-2 when preparing your tax returns. Your last pay stub may be a good indicator of what your financials look like for the year and what your refund may be, however, there may also be an error that your company notices after your last paycheck. Always wait until you receive your W-2 before filing.

Myth: An extension will give me more time to prepare my taxes. 

If you don’t think you’ll be able to complete your taxes on or before April 15th, you need to make that decision sooner, rather than later. When you file for an extension before April 15th, you are able to bypass a penalty that would hit you on October 15th, if your taxes still are not filed. However, the IRS still expects you to put forth a strong willed effort to pay what you owe on your taxes by April 15th. What happens if you don’t pay at least 90% of what you owe? You’ll end up adding on a .5% penalty fee of anything that is still unpaid. This holds true even if you are waiting until October 15th to file your extension.

Myth: I’m unemployed so I don’t have any taxes to pay. 

If you received unemployment benefits from a local, state, or even federal level this year, you still need to file your taxes. The government issuing your benefits will send you a Form 1099-G, and will illustrate what taxes were withheld from money paid out to you. However, the good news is that as long as you are actively job searching during your time of unemployment, you may qualify for deductions.

Myth: All gifts can be considered charitable.

The gifts you bought for your co-workers and family during the holiday party are not considered a charitable deduction. While we don’t want to discourage you from being generous during the year, the only qualified charitable deductions are those that meet the exemption status. Not sure if your monetary gift is charitable? Click here to search to see if it falls within the gift giving tax limits.

Want to know the best way to avoid falling for these myths? Give E&Y Tax Preparation Services a call today and we’ll set up an appointment to make sure your taxes are done right every year! (248) 362-1313