Tax day is quickly approaching, which means if you haven’t filed your taxes yet, today is the perfect day to get started. But before you do, we think it’s important to clear up some common tax myths that float around each year. These myths could end up costing you thousands of dollars if you’re not careful.

Myth: An extension to file is an extension to pay

Millions of Americans will end up filing a tax extension this year. This extension will give individuals until October 16 to file a completed return. Contrary to what some people might tell you, it won’t give additional time to pay the amount you owe. Instead, what you owe will still be due on April 18. While your extension will will help you avoid any penalties for failing to file, it won’t save you from the failure to pay penalty. Any balance that you have after April 18 will begin accruing a failure to pay penalty of 0.5% per months. You will also be charged interest on the outstanding balance.

Myth: You must file a joint return if married

Another idea that we frequently hear is that you must file a joint tax return if you are married. In reality there are no restrictions on the filing status that you need to use as a married couple. ATBS will prepare two separate returns for their clients. One return will be for married filing jointly and the second will be married filing separate. By doing this we help reduce your overall tax liability by using the best filing status for your situation.

Myth: You’re more likely to be audited when you file an extension

Many people are against filing a tax extension because they feel that it makes them more likely to receive an audit. While there have been numerous studies done on this issue, none have presented proof that there is a correlation between filing an extension and being audited. What we do know, is that only 1 out of every 119 taxpayers, or less than 1%, will be audited during any one tax year. So if you need to file an extension, don’t worry about it  increasing your chances of an audit.

Myth: You should always want to receive a tax refund

Most of you probably know people that get excited every year because they are going to get a tax refund. However, because many of you are owner-operators, there is only a small chance that you will be receiving a refund check. And you should be thrilled about this. It means you managed your money well throughout the year, and you didn’t give the IRS an interest-free loan. As long as you kept up with your quarterly tax payments, you should be able to break even on tax day.

If you are not currently an ATBS client and would like to have one of our tax professionals complete your 2016 state and federal tax return, give us a call at 866-920-2827.

 

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Sean Bryant, Digital Marketing Manager

Sean is a graduate of the University of Iowa where he received a Bachelor's of Arts degree in economics. After beginning his career in banking, he found his love for marketing.  Before arriving at ATBS in 2014 he spent time working for two different technology startups as well as his own freelance marketing company.

Outside of work Sean enjoys spending time with his wife, daughter and dog. When he's not traveling you can frequently find him on his bike or snowboard.

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