Top 6 Most Common Tax Myths and the Truth Behind Them

Taxes are a fundamental part of adulthood that we wish our schools would have taught us. But instead, we fumble our way to learning everything we need to know about taxes. 

With the presence of the internet, learning can become a lot easier. But it also comes with an abundance of fake news and misinformation. So, here are six of the most common tax myths that might get you into some serious tax problems if you believe that they’re true.

Tax Return Filing Is Voluntary

Even though it’s technically classified as a voluntary tax system, it doesn’t mean that filing a tax return is voluntary. What it means is that instead of the government completing your tax return, you can submit it instead. 

You Can File and Pay Later With a Tax Extension

Filing, yes, but paying, not really. You can file your taxes at a later date, but you should still meet the deadline for submitting your payment. Not paying at the regular tax filing deadline could result in penalties and interest.

Your Unemployed Spouse Can Be Claimed as a Dependent

Although your unemployed spouse may technically depend on you financially, this isn’t the definition of dependent that the IRS follows. According to the IRS, your spouse could never be considered your dependent, unemployed or otherwise.

You Can Claim a Loss If Your Stocks Lose Money

Having your stock plummet in value can really suck, and although we’d like to consider it a loss, the IRS would think differently. Losing money in stocks would be regarded as an unrealized loss. And unrealized gains and losses have no tax benefits or consequences. The only way you can claim it on your tax return as a loss in this scenario is if you sold or transferred your stocks at a loss.

You Won’t Be Taxed If You’re Paid in Cryptocurrency

Cryptocurrency has boomed in recent years, and more and more people are investing in it. But if you’re only going to ride on the cryptocurrency train because you think you won’t be taxed on it, think again. If you’re being paid with cryptocurrency for trade in tangible goods or rendered services, you’ll still need to claim it as income when you file your taxes.  

Your CPA Is Responsible for Any Errors on Your Tax Return

Hiring a CPA to complete your tax return is a smart move, especially if you’re still a bit clueless about how it works. But don’t think that mistakes on their end would only reflect on them. It is still your name on that tax return, so you are liable for any errors made. Even if you hire a CPA to do your taxes, you should still double-check everything before handing it in.

Final Thoughts

Doing your taxes can be an overwhelming thing at first, but you’ll get the hang of it the older you get. Don’t be afraid to ask questions and ask for assistance when you’ve got a concern about your taxes. Finding out the truth is always better than blindly following a misconception.

If you need further help on your taxes, rely on Axiom Tax Resolution Group. We are a tax resolution specialist in Birmingham, AL that can provide the right solutions to your tax problems. Contact us today to get a free consultation!