Show Me the Money: Debunking tax myths and separating fact from fiction

Show Me the Money

HARRISBURG, Pa. (WHTM) — Tax day is now just a month away. As you prepare to file, you’ll find a lot of information especially online. Make sure you know what’s rumor and what’s fact. If not, it could cost you big.

“There’s a lot of myths, a lot of rules, and a lot of mistakes that could lead to error and a lower refund, even an IRS audit,” said Mark Steber, Chief Tax Information Officer for Jackson Hewitt.

He says this time of year tax misinformation is everywhere.

“It’s probably part and parcel to the complexity of our tax code james, 70,000 pages, tax law changes every year and now you’ve got social media where everybody is an expert on everything from healthcare to global politics. Someone takes a fact or new change and they just misunderstand what it means.” 

So let’s separate fact from fiction. Up first, if you’re working from home because of the pandemic you can get a home office tax deduction – that’s false.

“To take the home office deduction on your tax return and all the expenses that go with it you have to have a home office business. You basically have to be self-employed or your spouse,” Steber said. “You have to have a business based out of your home.”

Next, unemployment benefits are not taxable – sorry, that’s false too.

“those monies are just like regular income, regular earnings, regular wages,” Steber added. “they are fully taxable and they go on your tax return If you leave them off I can promise you the IRS will find out and they’re going to come looking for their share.”

How about this one, stimulus payments are not taxable – that one’s actually true.

Keep this in mind, you could be due even more cash.

“For example if you had a new dependent come into your household, you had a child, adopted a child, fostered a child, you share custody with a spouse. If you have a new dependent you qualify for more money than the IRS has probably already sent you so it will go on your tax return as an additional increased request for more stimulus money.”

“Many people did their taxes a lot later last year because of the pandemic the deadline was pushed back until the summer. Now that gap is so short would you suggest people do file their taxes early even though it seems like we just did them? Yeah it’s the same in the tax pro business, it’s like the never ending tax year but i would give you this advice and to your viewers. It’s always always a good idea to file your taxes as early as you can.”

Because this year in particular, filing your taxes can be challenging.

“The last myth is that my taxes are pretty simple, I’ll just look at last year’s tax return and do it on a smartphone. Biggest mistake you can make,” said Steber. “You’ll probably leave off a benefit, leave off some money, and get a smaller refund than you deserve.”

A big advantage of filing early of course is getting your refund early. But if you’re missing documents, starting the process early gives you a chance to figure all of that out which could lead to an even bigger refund.

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