Common Tax Myths That You Should Never Believe

Insights From Tax Preparation Service Providers

As a tax preparation service provider, we’ve talked with numerous people who need help with preparing their income tax returns. Through our conversations, we have realized that some folks have misconceptions about the tax filing process and about taxes in general. Some of these misconceptions are quite innocent, but others are harmful since they can get you into legal trouble. To help you stay away from legal issues, we’ve listed below some of the tax myths that you shouldn’t believe:

Myth #1: Only rich people can be audited.

People who earn more than $100,000 have higher chances of getting audited than those who earn less. However, this doesn’t mean that you’re automatically spared from auditing if you don’t earn six figures! Aside from your income, numerous factors can raise red flags and catch the eye of the IRS. The only thing you can do, then, is to keep detailed records of all your income and expenses and save all relevant receipts and invoices from your financial transactions. This way, you’ll have enough documents that can back you up if you get audited.

Myth #2: Online income is non-taxable.

Many people believe that only traditional income has to be reported to the IRS. But this isn’t really true! Any income that you earn — whether you earned it from your nine-to-five job or from selling products on your online shop — needs to be listed in your tax return if it goes beyond $400.

Myth #3: Students don’t need to pay taxes.

Students who have been claimed as a dependent of their parent or legal guardian aren’t required to pay taxes in most cases. However, this is applicable only if you earn less than $12,400 (for tax year 2020). If you’re a student and you earn more than this amount through your job/s, you’ll be required to file an income tax return. However, even if your income falls below $12,400, experts recommend that you file your taxes anyway since you might be due a refund if your employer withheld some of your pay for tax purposes.

Stay away from these tax myths to avoid getting into legal trouble! If you need more tips, or if you’re searching for an income tax preparer who can assist you with your tax returns, don’t hesitate to call Serita Lombard, CPA. Dial (770) 443-5437 now to use our tax preparation service in Dallas, GA!

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