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Tax misconceptions that may cost you money

On Behalf of | Mar 20, 2018 | Tax Law

Do you remember what you were thinking about last March? Probably not–but whatever was on your mind, there is a good chance that it involved taxes. The filing deadline is approaching quickly, so you may still be thinking a lot about taxes.

And chances are, some of the things that you believe about taxes are actually incorrect. Misconceptions about taxes abound, largely because tax law is very complicated and taxes are an intimidating topic. Some of these misconceptions are harmless, but others can cost you dearly when it’s time to collect your tax return.

Misconception: I can’t afford to pay taxes this year, so I just won’t pay file

You should file taxes every year, even if you can’t afford to pay. Otherwise, the IRS may flag you for failure to file. This is not a severe criminal charge, but you will probably have to pay a fine. The IRS offers a few options if you cannot afford to pay. You could ask for an extension, or set up a payment plan. But under no circumstances should you fail to file your return.

Misconception:My children are grown, so I don’t have any dependents

If your parents are elderly and you are supporting them, you may be able to claim them as dependents. To claim the dependent-care exemption, you must be paying over 50 percent of their living expenses. However, if you and your siblings are sharing responsibility for your parents, then only one of you can count them as dependents.

Misconception: It’s best if my spouse and I file jointly

It is often the best financial choice for couples to file their taxes jointly. This is not true in every case, though. If your children are no longer your dependents, it might be best for you to file separately from your spouse. This is also true if your income is significantly higher or lower than it was when you filed last year.