Top 8 Misconceptions About Taxes

The task of filing one's taxes seems to be flooded with rumors and misconceptions. Here are the Top 8 Misconceptions About Taxes:

1) Students are Exempt - While there are tax credits for students, no student is truly exempt unless they did not make enough money to file.

2) Married Tax Payers Must File Jointly - Married couples do need to indicate that they are married on their tax return but they are free to decide whether or not to file jointly. Married couples should weigh their options and may find one filing status more beneficial than another.

3) Early Filers Have a Higher Chance of Audit - This is simply not true. The IRS does have red flags for auditing someone, but filing early is not one of them.

4) There is No Need to File if Taxes are Withheld from Your Paycheck - Although taxes have been withheld from your paycheck each month, you still need to file your taxes. Plus, you may be missing out on a return of funds withheld!

5) You Only Need to Reduce Your Tax Liability if You're Rich - This is one of the oldest and most untrue myths about taxes in the book! People of all income levels should take advantage of any tax deductions and credits they qualify for.

6) You Can Not Claim a Working Adult as a Dependent - Even if your child is over 18 years of age and is working full time, you can still claim them as a dependent if you provide more than 50% of their financial support.

7) Only Parents Living With You Can be Claimed as Dependents - Just as with children, if you provide more than 50% of your parents' financial support, you may claim them as a dependent.

8) You Should Not File Your Return Until You Can Afford to Pay - Deciding to not file on time and not file for an extension are the worst decisions you can make if you are low on funds. The IRS may be able to work out a payment plan with you and you will avoid failure-to-file penalties.