If you’re anything like most Americans, it’s likely that you don’t know all the answers about tax filing. To be informed about the most recent changes and myths regarding the tax code, it is important to do as much research online as you can.
These six suggestions will help you get started. tax mythsThe National Association of Enrolled Agents, a group of federally licensed tax professionals who specialize in taxes, has many encounters.
Myth: Because I’m filing an Extension, I don’t have to pay any fees before the deadline.
Fact: Extendions to tax filings only increase the time you have before you file and not the amount of taxes you have to pay. You have until April 15th to pay any money owed if you file an extension. Otherwise, penalties and interest begin to mount up.
Myth: Since I lost a lot of money in the stock market last year, I will not owe income taxes.
Fact: You can only deduct capital losses from your ordinary income up to $3,000 per annum. You can also reinvest dividends or receive them as income, and they are subject to tax.
Myth: They paid my cash, so I don’t need to report it.
It’s important to report income if it is income. Income is always reported, regardless of whether it is cash, tips, or dividends.
Myth: I am too young to be required to pay taxes
Fact: Dependents who work part-time in high school must file tax returns if they earned more than $6,200 in 2014. If they wish to receive their refund, or if they have unearned income of more than $1,000, they must file a return.
Myth: Income earned outside the United States is not subject to tax.
Fact: The operative verb is “income,”This means that it is taxable. The IRS requires all earned income to be reported by taxpayers, even if it was earned in another country.
Myth: Tax preparers will only complete forms that you can fill out yourself.
Fact: Tax preparers are familiar with the complex and constantly changing tax codes, regulations, and laws. They also know how to apply them for your benefit and help you save money. American’s tax experts, the enroll agents, continue their education each year to keep up with tax laws and how you can benefit from them. They can represent you before the IRS, as well as in tax preparation and planning.
On the website, find an agent enrolled in your area “Find an EA”Directory www.naea.org.