This time of year, you can hear all sorts of crazy things about federal income taxes. Determining what’s true and what isn’t can be complicated, though. And not knowing? Well, that can cost you money. So here’s 7 tax myths debunked for you and one tax truth that may help you this time of year.
Tax Myth #1: Income taxes are due April 15, 2023.
Nope. Actually, this year’s taxes are due on April 18th. Because April 15 falls on a Saturday, income taxes would normally be due on Monday, April 17th, but that’s Emancipation Day in DC. So, this year, for most people, income taxes are due Tuesday, April 18th.
However, if you live in a disaster area in California, Alabama, or Georgia, your taxes aren’t due until October 16th
Tax Myth #2: Refund last year – same or more this year
Nope. While many returns are getting a refund, the refunds for the returns filed so far this year are about $400 less than last year. This is due, in part, to tax credits returning to their 2019 pre-pandemic level. This includes the additional child tax credit, child and dependent care credit, and earned income credit. And because tax credits reduce your tax liability dollar for dollar, if the credit is less, your refund will be less.
Tax Myth #3: If you are unable to pay your taxes – just file an extension, and you can pay it later
Nope. An extension is an extension to file your return, not an extension to pay your taxes. If you file an extension, you must estimate your tax liability and pay that amount with the extension.
Tax Myth #4: If you use a tax preparer and there are errors on your return, you are not liable
Nope. You are ultimately responsible for the information on your return, so make sure your tax preparer is qualified. Also, you should look at the numbers on your tax return to see if they make sense and compare them to last year’s returns asking for an explanation for large differences.
Tax Myth #5: Minor students don’t have to file
Maybe. For 2022, if a person earns less than $12,950 of income, they do not need to file a federal tax return – but they probably should anyway to claim a refund of any taxes that were withheld.
Tax Myth #6: Now that I work from home, I can take a home office deduction
Nope. If you are a W-2 employee, you cannot deduct a home office deduction.
Tax Myth #7: I got paid for goods or services in crypto, so I don’t have to pay taxes on it.
Nope. Virtual currency is considered currency; if you provide goods or services, that is taxed as ordinary income.
Tax Truth #1: You can file your taxes for free
You can get free tax help and free tax filing at irs.gov. If you make $73,000 or less, it is called the “IRS Free-File Program”. Just use the online tool to see if you qualify, as some providers have their own criteria.
If you make more than $73,000, you can file your taxes for free using “Free File Fillable Forms”. If you want to talk to someone in-person and make less than $60,000, look for a local VITA center (Volunteer Income Tax Assistance).