I've heard it all... When I was a Revenue Officer I've heard every Tax Myth under the sun. I've compiled and dispelled many myths over the years, and from the looks of the e-mails I receive, it looks like I'll have to compose more to keep you all from making fatal mistakes!
Myth 1: You can Deduct your Sales Tax
You haven't been able to deduct sales tax made on personal purchases since 1986.
Myth 2: You HAVE to File Jointly When Married
You can always file "Married File Separately." Usually this means less money back, but it can't work out to your advantage. Don't inherit your spouse's IRS Debt issues if you don't have to!
Myth 3: Students are Exempt
There is no exemption that excludes students from tax. Don't fall for this trap, students. File your taxes!
Myth 4: You can EASILY settle your Debt and Save Big
For those that even quality, setting IRS Debt with an Offer in Compromise is a grueling journey to the finish line. You have to file forms, provide documents, pay a $150 fee and depending on the payment plan, a percentage of the settlement offered. The money you pay is not refunded if you are not approved. Don't mistake an OIC for an easy way out! It's not.
Myth 5: You cannot claim your Child as a dependent if they are working
This is bogus. You can claim your child as a dependent no matter how much money they earn.
Friendly Reminder Despite press releases stating the IRS was going to play it nice and help people during this financial crisis, I've received a surge of e-mails from people asking for help. They're telling me that the Revenue Officers are as ruthless as ever. Don't let a Tax Myth lead you down the path of destruction. Double check every Tax Decision you make with a professional before proceeding.
Have a happy and safe weekend everyone! I'll be back in the office on Monday to help you with your IRS issues and financial questions.
Labels: Offer in Compromise