Tax laws are often summarized for sake of quickly explaining a potential benefit—or conflict. When details are omitted, it’s easy to misinterpret law or consider the advice of a trusted friend versus taking time to do firsthand research.
Save yourself a potential headache and review the top four tax stories we’ve debunked.
Tax Myth #1: I can file my tax return with the details from my last paycheck stub.
The figures listed on your last paycheck stub may be close to what will be released on your W-2, but it’s not guaranteed that the numbers are always right. Plus, this is technically illegal. Your last pay stub is not considered an IRS-recognized document for filing.
It’s common for calculations to be a few cents off throughout the year and not be accounted for until end-of-year. Payments such as bonuses and commissions can easily be forgotten, and no one enjoys the process of filing an amended return.
Our advice? Wait for your employer-prepared Form W-2. You should receive this document by January 31st at the latest.
Tax Myth #2: Being unemployed means I don’t have to pay taxes.
If you receive any form of unemployment benefits either from a city, state, or federal level, then that’s considered income. Earned income should be reported on your tax return.
Unemployment benefits paid are typically reported with a Form 1099-G. This form functions much like a W-2, outlining how much you were paid and if taxes were withheld.
Tax Myth #3: Any money that I give counts as a charitable contribution.
This is not true. Giving without the expectation of repayment is an admirable gesture. However, it’s important to note that only charitable gifts and donations made to IRS-qualified exempt institutions are tax-deductible.
Typically, a receipt is exchanged when a tax-deductible gift is received. If you recently made a contribution and are unsure if your donation would count as a Charitable Contribution, use the “Exempt Organizations Select Check” located on the IRS website.
Tax Myth #4: A tax filing extension gives me more time to pay my balance due.
Filing on-time is the first crucial step to determine your eligibility to enroll in an IRS-approved installment repayment plan.
Neglecting to file on-time or worse, avoiding payment of your outstanding balance altogether, subjects yourself to a failure-to-pay penalty which starts at a minimum of $205. For those who owe less than $205, the penalty is the amount due, plus 100% of the unpaid tax.
If you need assistance with planning next year’s tax filing, contact your local H&R Block tax professional. Consider these tax myths debunked!
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