Everyone has tax advice but beware, some of it is just bad advice. It’s always better to check with you tax advisor before you get caught up in bad tax tips. Here are 5 tax myths:
* You will have more time to pay your taxes if you get an extension. Of course, this is incorrect. An extension only gives you more time to file your taxes. If you owe money, you must still pay what you owe when you file your extension. If you don’t have all the cash to pay your entire tax bill, don’t ignore it, get on a payment plan through the IRS.
* If you get an extension you will get audited. We all know someone that waits till the last minute to gather their tax information then rush to get their taxes done only to find that they are missing some documents or receipts, etc. Under reporting income may be the cause of an audit. Rather than to rush around and make errors on your tax return. It’s better to get an extension and file them correctly to begin with rather than send a return full of errors.
Have your tax preparer figure out if you owe taxes. If you owe, pay that amount or get with the IRS to set up a payment plan. An extension will only give you extra time to gather all your documents and file correctly.
* Buying real estate will give you tax breaks. Unless you itemize your taxes your mortgage interest and property taxes are not deductible. Owning real estate may be a good investment for some, but don’t buy just to buy it thinking you will get a good tax deduction for it.
* You will trigger an audit by taking a home office deduction. False. You will no more trigger an audit because of a home office deduction than you would any other deduction. As long as you take an accurate deduction and have your receipts, there shouldn’t be a problem even if you are audited.
* There’s no need to report money from a side job. Not true. Just because you didn’t receive a W-2 or a 1099 does not mean you shouldn’t report this income. That extra cash is still taxable.
If you aren’t sure about a tax question you should contact a professional for assistance or visit the IRS website. At Summit CPA we offer multiple resources to keep you on the right track. If you need assistance contact our office at (866) 497-9761 to schedule an appointment with our tax advisors.