5 Popular Tax Myths, Busted

People come up with the craziest theories about taxes, but some of the rumors you may hear just aren’t true. By clearing up these myths and providing you with accurate information, you may have a more efficient tax season. Let’s answer a few tax myths to improve your filing experience this year.

Myth #1. If you apply for an extension to file your taxes, you’re more likely to be audited. Studies have never found any correlation between extending the deadline for filing and getting audited. Another myth says that if you file early, you are more likely to be audited. That’s not true either.  Less than 1% of taxpayers are audited.

Myth #2. Don’t file your tax return until you have the money to pay the tax due. April 15th is the tax deadline to file your taxes, whether or not you have the money. File on time, and then work out an installment payment plan with the IRS. You may also receive a tax refund after TurboTax gives you the tax deductions and credits you’re eligible for.  Last tax season, the average tax refund was approximately $3,100. 

Myth #3. If your parents live in a nursing home, they can’t be your dependents. It is true that dependents who are not relatives need to live with you, but that rule doesn’t apply to your parents. If you support your parents or another relative, you can claim them as your dependents no matter where they live.

Myth #4. You can write off your dog. We all know our fur babies can get expensive, but unless your pet-related expenses are directly related to protecting your business, as in the case of a guard dog, or if you need a dog for medical reasons, such as a seeing eye dog, you cannot write off expenses related to your pet’s care.

Myth #5. Money you inherit is taxable to you. In almost every state, if there is a tax to be paid, it is paid by the estate of the person who died and not by you. The six states that impose an inheritance tax include Iowa (which is in the process of being phased out), Kentucky, Maryland, Nebraska, New Jersey, and  Pennsylvania. But even if you live in one of those states, unless you inherit millions from a person to whom you have no close family ties, you probably are off the hook for inheritance tax. And by the way, you don’t pay tax on gifts you receive either.

No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed.