Tax season is approaching, and you may have a handful of questions that are top of mind as you plan to file. Can you deduct cryptocurrency losses? Do students have to file taxes? Can you pay your taxes later if you file an extension? Can you claim your dog or cat as a dependent?
Because it’s likely that you may have heard a few myths while seeking answers to these questions, we asked a handful of our TurboTax Live experts to bust some of the top tax misconceptions before you sit down and file your taxes.
Myth One: Filing a Tax Return is Optional
It depends on how much income you make. Not everyone must file a tax return, however, most working adults are required to file (just like me)! – Miguel Burgos, CPA for 6 years
Myth Two: A Crypto Loss is Not Tax Deductible
Believe it or not, a cryptocurrency loss is not a virtual loss, it’s a real tax loss. So, if you sold cryptocurrency, you can definitely deduct that loss when filing. – Ernie Sadashige, CPA for 13 years
Myth Three: Filing an Extension Means I Can Pay My Taxes Later
Filing an extension does not mean you get to pay later, however, you do have time to finish filing the paperwork if you file an extension by the tax deadline (which is April 15 this tax year). It’s always a good idea to file early – especially by the tax deadline. – Claudell Bradby, CPA for 19 years
Myth Four: I can claim my pet as a dependent.
If you can give me a social security number for your dog, then sure! – Miguel Burgos, CPA for 6 years
Myth Five: I can deduct moving expenses for my family.
Moving expenses are no longer tax deductible on federal tax returns, except for active duty military. But you still may be able to claim moving costs on some state tax returns. – Ernie Sadashige, CPA for 13 years
Myth Six: If You Can’t Afford to Pay Your Taxes, It’s Better Not to File at All
If you find out you owe a lot of money – you might consider not filing, but it’s a bad idea. The IRS will eventually reach out to you and you’ll pay a lot more with interest and penalties. It’s better to set up a payment plan with the IRS. – Ernie Sadashige, CPA for 13 years
Myth Seven: Students/Retirees Don’t Have to File a Tax Return
Students and retirees do have to file their taxes, however, it’s on an individual basis. – Claudell Bradby, CPA for 19 years
Myth Eight: Married Couples Should File Separately in Order to Save
We see many couples filing separately in order to save. However, I like to explain to them that married filing separately usually isn’t the best way to save on taxes because the IRS limits some deductions and credits for separate filers. As long as you can – file jointly! There are a wider tax bracket and lower tax rates, plus there are more credits and benefits. – Miguel Burgos, CPA for 6 years
Don’t worry about remembering specific requirements when it comes to filing — TurboTax will ask you simple questions and give you the tax deductions and credits you’re eligible for based on your entries. Another myth may be that you need to leave the comfort of your home to get help from a tax expert, but know that if you have any questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent with an average of 15 years experience to get your tax questions answered without even leaving your house. A TurboTax Live CPA or Enrolled Agent can even review, sign, and file your tax return.