As America’s dreaded tax season draws near, taxpayers are inundated with a flurry of advice on how to minimize their tax burden.
While some of this information may be sound, much of it is based on tax myths and misconceptions about the filing process. These myths are both an unfortunate consequence of the complexity of the tax code and an intentional effort by some tax professionals to increase their clients’ bill.
Say it with me: we’ve had enough! It’s time to dispel some of the most common tax myths and set the record straight.
TAX MYTH #1: You Must Itemize to Get a Tax Deduction
One of the most pervasive tax myths is that you must itemize your deductions in order to receive any tax relief. This is simply not true! The standard deduction, which is a flat amount that all taxpayers are entitled to, has been increased in recent years and now stands at $6,300 for singles and $12,600 for married couples filing jointly.
In addition, many common expenses can be deducted without having to itemize, including job-related expenses, student loan interest, and contributions to a traditional IRA. In 2022, many US taxpayers are self employed, and use software to make your pay stubs or create their invoices — some of which include itemized breakdowns of expenses. Though this information is great to have, it’s not necessary to itemize under a certain amount.
So don’t be afraid to take the standard deduction — it may be more beneficial than itemizing in your particular situation.
TAX FILING MYTH #2: You Can’t Claim a Tax Deduction If You Don’t Have Children
Another common tax myth is that you can’t claim a tax deduction if you don’t have children. Again: this is not true! Though families may be subject to indirect taxes, there are a number of tax deductions and credits available to taxpayers without children, including the Earned Income Tax Credit, the Child and Dependent Care Credit, and the American Opportunity Tax Credit.
Don’t let the myth that you have to have children keep you from claiming valuable tax deductions and credits. There are plenty of opportunities available to single taxpayers without kids, or for those who don’t think the family life is right for them.
TAX MYTH #3: You Can’t Claim a Tax Deduction for Your Mortgage Interest
This is one of the most costly tax myths out there. The fact is, in the United States, you can claim a deduction for your mortgage interest — and for a lot of other deductible expenses as well. You just need to be aware of what’s available to you and make sure you take advantage of it.
For example, if you have a mortgage, you can claim a deduction for the interest you pay on that mortgage. You can also deduct your property taxes, your state and local income taxes, and a variety of other expenses. The key is to keep track of what’s deductible using the most up-to-date tax package and make sure you claim it on your tax return.
TAX FILING MYTH #4: Education Expenses Are Always Tax Deductible
This is another common tax myth that can lead to taxpayers overpaying their taxes. The fact is, not all education expenses are deductible. In order to be deductible, your education expenses must meet specific IRS criteria.
For example, tuition and fees paid to a qualified educational institution are deductible, but expenses for books, room and board, and travel are not. So make sure you understand which education-related expenses are deductible and which ones are not before you file your taxes.
TAX MYTH #5: You don’t need to file a tax return if you don’t owe any taxes
By far the most common tax filing myth is the idea that you don’t need to file a return if you don’t owe any taxes. The truth is that everyone who earns an income must file a tax return, regardless of whether they owe money or not.
This may seem unfair, but it’s actually designed to ensure that everyone who earns an income pays their fair share. In the United States, the tax system is based on a progressive structure, which means that higher earners pay a higher percentage of their income in taxes.
This is why it’s so important to file a tax return even if you don’t owe any money – by doing so, you ensure that you’re not missing out on any potential credits or deductions that could lower your tax bill. Filing a tax return even if you don’t owe taxes can also result in a refund, so there’s no reason not to file!
