During this year tax season fulfilling your tax return paperwork could turn into a headache and a stressful time, so you could easily search for hacks and advice from others experience on the internet.
This seek of help may cause some advice without basis become viral and start a spread of myths and misinformation that no regulator institution has confirmed. Keep reading to know more about the 4 taxes myths that became viral this 2023.
Myth No.1: Students don’t have to pay taxes.
Most students in college get part-time jobs to support their expenses and most cases they don’t make enough money to be obliged to present an income tax return.
Usually, students earn less than American working full time, but if the students get paid the equal amount or greater than the minimum gross income, they must file a tax return.
Answer: Anyone who earns an amount of money equal or greater to the standard deduction for single filer must present an income tax return.
Myth No.2: Payments in cryptocurrency are tax free.
The most talked attribute about the cryptocurrency is that it is entirely digital and there is no physical receipt that could help track the transfers. Cryptocurrency is presented from their advocates as a payment method that lacks an attachment to any physical organization such as banks and therefore there is no paper trail. This increased the belief that they don’t have to be included into tax reports.
For tax purposes the virtual currencies are classified as property. And if someone pays you in cryptocurrency in exchange of any good or service it is taxable as an ordinary income.
Answer: Despite cryptocurrencies existing in a digital space, for taxes purposes they are considered as a property and must be included on tax paperwork.
Myth No.3: Your tax preparer is liable in case there are mistakes in your tax return paperwork.
A professional tax preparer or accountant is more likely to be better informed about the tax code and all the changes that apply to that year. Your accountant could still do mistakes or typos on your paperwork.
You as the taxpayer signing the documents are still legally responsible for all information on your tax return, so any discrepancy with your return files will be addressed with you, despite who did the paperwork. Be sure to do a quick check on all your paperwork before submitting it and ask your tax preparer any doubts you have.
Answer: All the documentations go to the IRS on the taxpayer’s name who is still legally responsible for all information on your tax return despite who did the paperwork.
Myth No.4: A file extension gives you more time to pay your taxes.
If the due date for this year is coming closer and closer and your papers aren’t ready, you can ask for an extension. The IRS gives you an extra 6 months if you submit the IRS tax form corresponding to your filing status.
The tax extension file gives more time for filling your taxes and get all the paperwork in order, but this doesn’t mean it gives you more time to pay the corresponding amount of taxes to the IRS. There are penalties and interest for taxes which are submitted late and the date this fee will start is the tax due date regardless if you asked for an extension.
Answer: An extension gives you an extra 6 months to submit your paperwork, but the due date to the payment of taxes stays the same.