It’s January and, if you’re like many people in the US, you’ve realized that it’s time to start planning your income taxes.
But before you get started on filling out forms for hours and hours on end, we want to make sure that we don’t forget something important.
Here at freeopinionist.com/ has some more information about paying your taxes on time.
We’re here to let you know about a couple of tax myths that can lead you down the wrong path!
1. If I have a business but don’t have any employees then I don’t need to pay taxes.
You may have heard this before, but it’s just not true. If you’re a sole proprietor or a sole proprietorship then you need to pay tax on all of the income from that business each year just like an employee would.
You have to pay taxes on your business income whether you do it yourself or hire someone else to do it for you. There’s a good chance that if your business is profitable enough to make money, then you will be paying taxes on your profits, too!
The IRS doesn’t make exceptions for how many employees you have in the business or how profitable your business is.
2. I’d like to move money overseas and invest in the stock market in another country.
You need to be careful when you put your money into foreign investments. You can’t close your eyes and cross your fingers that the odds will be in your favor. There are specific laws for this type of situation and there are plenty of penalties for not following them.
These rules aren’t limited to taxes, either; they include things like immigration and overseas employment.
It’s best to consult an international tax attorney or a tax accountant when you plan on relinquishing some control over where your money is invested and how it is treated in terms of taxes.
3. Tax audits will only happen if the IRS thinks that I’m hiding something.
Actually, this is one of the most common myths that most people believe about behind-the-scenes tax audits.
While it’s true that the IRS does investigate cases where they believe fraud has occurred, it’s not true that they will only start an audit when you’ve done something wrong.
The truth is they conduct random audits every year to ensure that everyone is paying their fair share of taxes. For example, in 2013, they conducted over 1 million random audits on people who owed no taxes whatsoever!
4. I pay my taxes on time so I don’t need to worry about doing any other kind of tax planning.
While we’d like to think there’s nothing we need to do after we file our taxes, sometimes we know that we’ve done things wrong and it would be easier for us to handle if we had some money taken out of our taxes.
But not all prepayments and payments will be deductible and it can be difficult to know exactly where everything falls into place.
If you’re thinking about doing something like this then you should speak with a tax professional before you take any action.
5. I don’t need to pay taxes if I can’t afford to pay them.
This is another really common myth and it’s also completely untrue. If you earn income, whether it’s from a job or some other source, and you don’t pay taxes on this income then you’re going to end up paying more than is necessary.
Not paying your taxes will only hurt you in the long run and it may hurt your chances of getting a loan of any kind as well as making it hard for you ever to become financially stable.
6. You can’t get a loan if the IRS is after you.
While this is a common myth, it’s also not true at all. In fact, you can get a loan whether or not the IRS is after you! Don’t let the IRS scare you away from getting a loan or filing your taxes.
You can even do both at once if it’s easier for you to file and pay at the same time. If for some reason, there are issues with one of your accounts then they will help to straighten out your account as best as they can.
7. I will only hear about my taxes from the IRS if I file a tax return.
You may have heard this one before, but it’s not true. Not only that but if you know that you’re going to be audited then it’s probably a good idea to call or email the IRS and let them know as soon as possible so they can use your information to help them with their investigations.
Don’t assume that they won’t find out what kind of income or deductions you had and don’t assume that they won’t come knocking at your door.