Monthly Archives: January 2014

Tax Myths



Tax Myth that can get you in trouble! –- You’re safe with nothing more to worry about with IRS does not catch your failure to file tax returns for 3 (or 5 or 7) years. Fact, the statute of limitations – meaning the time the IRS has to examine your tax return – is three years following the date of filing or the due date of your tax return, whichever is later. If you don’t file a return at all, the statute of limitations never actually runs. In that event, you’ll want to hold onto your records, well, for forever. 

Tax Myth that can get you in trouble! –- Getting a refund check means the IRS agrees with your tax return.  Receipt of a refund means that the IRS mailed (or direct deposited) money that you said you were entitled to. It does not mean that the IRS agrees with what you reported; it merely means that the initial information you included didn’t raise any flags.

Tax Myth that can get you in trouble! — I’m a student, so I don’t have to pay taxes.  It does not matter if you are a student, what does matter is if you have taxable income above the filing thresholds. You may be entitled to special tax credits for full time college which are based in income and college costs but the only way to get these credits is to file a tax return and claim them.

Failure to file a tax return when due could result in the IRS filing one for you and even delays in financial aid. So if you don’t know the filing requirements check with a tax professional or check out the IRS web site

Tax Myth that can get you in trouble! — You don’t have to report income on payments that are less than $600. Payments for services, rents and other income items are taxable and subject to income tax no matter how small. The fact that you do not receive a 1099 or the 1099 you receive is not correct does not excuse the failure to report all income received. This myth is often repeated by those that fail to understand that it is not the 1099 or other tax reporting that makes a payment taxable it the receipt itself. 

Tax Myth that can get you in trouble!  – I’m not responsible for taxes owed by my spouse. Already having marital problems this tax myth may put the final nail in the coffin. While it is true if you filed separate tax return you may be safe for the sins of your spouse if you file joint returns you are both responsible for the total amount of tax due. Joint return in most cases result in joint liability this means the government can use any or all of the assets of ether spouse to settle an account.

Tax Myth that can get you in trouble!  Paying Federal Income tax is voluntary. There are any tax protesters and others that will tell you that this is true, but it is not true. No matter what they say or what excerpts from the Constitution or other legal opinion they show you the only thing that is for sure is if you don’t file your tax return you can be sent to jail.  Don’t pay your taxes and the IRS can come after everything you have and everything you ever will have.