Ginita Wall points out 5 tax myths that everyone should know about, especially with the deadline for filing right around the corner.
I would like to address some of those common tax myths that most people have heard about, although don’t really fully understand. Another source of information is TurboTax.com and the easy to use site will explain the tax myths as well as ensure that you get the biggest possible refund.
Despite popular belief, there is no evidence to suggest that if you file for an extension, you are more likely to be audited. Less than 1 percent of all tax payers are audited by the IRS, and you are also not any more likely to be audited if you file your taxes early.
Whether or not you have the money to pay the IRS, you must still file your taxes by the April 15th deadline. if you owe money, you can work out a payment plan with the IRS, but you cannot delay filing just because you may owe money.
Dependents who are not your relatives must be living with you, although parents are the exception to that rule, and if they live in a nursing home you can still claim them as dependents.
Unless your pet expenses are directly related to your business, such as paying for a guard dog, you cannot claim your pet on your taxes, which is also one of the common tax myths. A seeing eye dog or another medically required dog would also be an allowable exception to this rule.
Some states impose an inheritance tax (IN, IA, KY, MD, NE, NJ, PE, TN) and unless you live in one of those states, any tax is paid by the estate of the deceased person. Gifts that you give or receive are not taxable when it comes to filing your taxes and you do not have to declare them.