As you likely already know, the deadline for filing your 2019 tax return has been postponed until July 15th due to COVID-19. Even without the pandemic, tax filing can cause a bit of anxiety, even if you have a professional preparing your taxes. Mostly because you still have to get all your pertinent information together to file your return. You certainly don’t want to miss any deductions you may be entitled too, right?
To add to the anxiety at tax time, there are myths floating around that have the potential to give you a big headache. Three of those common tax myths are:
- If you make an error when filing your tax return it will hurt your credit score. Of course, this is not true. The 3 major credit bureaus grade your credit rating on how well you pay your bills. If you make an error and owe taxes, the IRS may put a lien on your tax return. However, as of 2018, due to accuracy concerns, the 3 major credit bureaus removed liens and debt owed to the IRS, from credit reports.
- You have until October 15th to pay the IRS if you file an extension. A taxpayer my request an extension if you have a complicated tax return and need extra time to gather your documents. However, the extension does NOT give you extra time to pay your tax bill. Failure to pay your taxes on the deadline (July 15th this year) will likely result in owing penalties and interest.
- You won’t have to adjust your W-4 withholdings. This is usually true if nothing has changed, you may not have to make changes. But, if you took a 2nd job or if your married and your spouse took a job that will increase your income, you may need to increase your with-holdings. The extra income may put you in a higher tax bracket which could cause an underpayment of taxes. It's also a good idea to check your withholding after you get a big raise or start a new job that increases your taxable income.
At Summit CPA we offer multiple resources to assist you with all of your tax and financial planning needs. Contact our office at (866) 497-9761 to schedule an appointment with our advisors.