Tax troubles with the IRS can be hard enough to deal with, but it gets even more challenging when you see misleading tax advice. Once you read a short comment online and apply it to your life without proper verification or consulting a tax specialist, you’re obligated to deal with the issues that follow.
So much information goes around, and it’s important not to be ignorant and actually check whether or not the pieces of information are legitimate. Here are some of the common misconceptions about tax that everyone should be aware of:
File Taxes When You Want To
It’s easy to feel confused about whether taxes are mandatory or voluntary, partially because so many people online make it seem like it’s the latter. This can also be blamed on taxation and its definition of being a ‘voluntary payment,’ which people use as an excuse not to do their taxes.
The problem with that is that the US tax code uses the word voluntary as an expression of every citizen’s responsibility to carry out and pay their taxes. It’s not a matter of freedom between choosing to comply or not, but rather an obligation to your state.
Don’t Pay Taxes for Illegal Acts
For the record, you shouldn’t be engaging in any illegal activity. If you happen to find yourself in such a position, though, any money that you solicit from those activities should still be paid for in taxes. You’d be committing an additional crime otherwise for not taxing that part of your income.
The IRS is under the jurisdiction of the US Government, but they focus more on tax compliance. However you make money can be a definite issue, but not for this organization. Speak with a tax specialist on how to best navigate this.
Skip Taxes as a Student
Although there’s some truth to this, it can be on a case-to-case basis. Almost everyone has to pay taxes at some point in time. If you have taxable income that comes in the form of part-time wages and a scholarship grant, being a student and having classes don’t count as a pass from the taxes and paying the IRS.
Make Your Pets Dependents
Having your little furry friends as dependents doesn’t seem like such a far-fetched idea, considering that they are given financial aid their whole life. Whatever the case, though, you cannot have any tax exemptions for declaring your pet as a dependent. It can be taboo to even make a claim because it can be tagged as tax fraud.
Keep Your Tax-Free Online Earnings
With all the ongoing activity online, people are already making big bucks from the internet. Some make it through online businesses; others post content that brings in sponsorships and ads. Regardless, the IRS still considers those earnings taxable almost as much as any other income from other jobs off the internet.
Identifying these myths and understanding why they’re wrong can lead to new insights into how taxes work. Take everyone’s tax advice with a grain of salt, though, especially if they’re not a specialist on the workings of taxation and the IRS. Instead, work with tax professionals who can give you the right advice about taxes.