Myths are pervasive in all areas of life, but federal tax refund myths are often based on misinformation and outdated knowledge. So let’s break down these myths and get to the truth behind them. Myths about the Refund Process There are tons of tax refund myths that center on the process of receiving that refund once you’ve filed. There are several factors affecting this: when you file, how large and complicated your returns are, whether you’ve paid each tax bill (state, federal, local, etc.), e-filing versus paper filing, and more. Here are some of the most common federal tax refund myths about the process, according to the IRS. Myth: Calling the IRS or your tax software providers will provide a more accurate refund date. The best way to find the status of your federal tax return is to check out the IRS’s Where’s My Refund? tool or the IRS2Go app. Your tax preparer and the IRS phone representatives will not be able to give you more accurate information than what you can find on your own using the abovementioned tools. Myth: The Where’s My Refund? tool is wrong because there’s no deposit date; the refund amount is lower than expected. Updates to the IRS tools are made once a day. If there is no deposit date shown yet, you can most often expect your refunds in 21 days, unless the IRS needs more information or has questions for you about the information you filed. And as for the refund amount: the tax code is constantly changing, as is your personal and business income, revenue, taxable assets, and so much more. Most often, the IRS will send you a letter detailing any changes to your refund or tax bill. The refund amount can also be low due to outstanding financial obligations you have with the IRS. Myth: My tax extension means I have more time to settle my tax payments. This is one of the most popular tax refund myths we hear. An extension is not meant to give you or your business more time to pay your taxes – there are several due dates …
8 Common Tax Myths
Taxes are complicated and confusing for non-professionals. We wanted to take some time to dispel the most common tax myths for you. Myth: Tax Filing is Voluntary When it comes to tax filing, the word “voluntary” doesn’t mean you only have to file if you want to. It simply means you are responsible for calculating (or hiring someone to calculate) the correct amount of taxes you and/or your business owe. The only people not required by law to file their taxes are those individuals who make too little income to file. Myth: Cash Transactions Don’t Have to Be Included in Your Taxes There is a reason many cash transactions are dubbed “under the table.” No matter whether there is little to no paper trail for a transaction, income is income and should be reported on your taxes for the applicable year. Myth: You Can Claim Home Office Deductions As a Result of the Pandemic Many people found out the hard way when filing their 2020 taxes that just because you have a home office does not necessarily qualify you for home office deductions. From tax years 2018 to 2025, whether your employee requires it or you request it, employees who work from home (not independent contractors, freelancers, or small business owners) can no longer claim the home office deduction. While many government and tax programs were amended to make exceptions for pandemic-induced hardships, the home office deduction was not among those amendments. Myth: Filing for an Extension Will Put You at Higher Risk for an Audit Many people are told that if you file an extension on your taxes, you are more likely to be audited. Studies have shown, however, that there is no correlation between extension filing and audits conducted. You can rest easy knowing that your extension is just that – an extension. Myth: Your Fur Babies Can Be Claimed as Dependents Even if they eat at the kitchen table and have their own bedroom, you can’t claim your pets as dependents. But here are some great tax deductions …