The figures listed on your last paycheck stub may be close to what will be released on your W-2, but it’s not guaranteed that the numbers are always right. Plus, as Phillips explains, this is technically not allowed. "Your last pay stub is not considered an IRS-recognized document for filing. It’s common for calculations to be slightly off throughout the year and not be accounted for until end of year. Payments such as bonuses and commissions can easily be forgotten, and no one enjoys the process of filing an amended return."
"Being unemployed means I don’t have to pay taxes."
If you receive any form of unemployment benefits either from the city, state, or federal level, then that’s considered income. All income should be reported on your tax return. Unemployment benefits paid are typically reported with a Form 1099-G. This form functions similarly as a W-2, outlining how much you were paid and if taxes were withheld.
“If I work from home I can take a deduction for my home office.”
With the rise of remote work in the last few years those that work from home may think they can claim the home office deduction. Unfortunately, as Phillips explains, if you are an employee, you cannot claim the deduction—the deduction for employee business expenses was suspended beginning in 2018. On the other hand, if you are self-employed and have a home office it is likely that you can claim the home office deduction.
"A tax filing extension gives me more time to pay my balance due."
Unfortunately, an extension of time to file does not give you more time to pay. Phillips says that "you should try your best to pay your estimated balance due when you request an extension." If you can’t pay, filing a tax return is the first crucial step to determine your eligibility to enroll in an IRS-approved installment payment plan.
On the other hand, the penalty for just failing to pay is only 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid.
By steering clear of these common tax myths, you can avoid costly mistakes and headaches this filing season. As always, it's best to consult a qualified tax professional who can look at your specific situation and give you legitimate, tailored advice.
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