Updated: May 13
The deadline to pay and file your 2020 taxes is April 15th, 2021. This 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 15th to file a completed return. Contrary to what some people might tell you, the extension won’t give additional time to pay the amount you owe. Instead, what you owe will still be due on April 15th, 2021. While your extension 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 15th will begin accruing a failure to pay penalty of 0.5% per month. 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, if you are legally married, then you have two filing options: married filing jointly or married filing separately. ATBS will prepare two separate returns for our 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. 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 2020 state and federal tax return, give us a call at 866-920-2827.