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 Money Matters :  Taxes

Twelve Tax Myths

Twelve Tax Myths
From the editors at WIFE

The American Institute of CPAs has identified twelve misconceptions that taxpayers have about their income taxes. Here are some of the tax myths they have found:

Myth #1

If you apply for an extension to file your taxes, you're more likely to be audited.

Studies have never found any correlation between extending the deadline for filing and getting audited.

Myth #2
You're more likely to be audited if you use the preprinted label on your return.


The label helps your return be processed quicker at the IRS Service Center, but that doesn't mean it will end up in the audit bin.

Myth #3

Don't file your tax return until you have the money to pay the tax due.

It is a crime not to file a tax return, so file your return whether or not you have the money. Generally, you can work out an installment payment plan with the IRS by requesting it on Form 9465.

Myth #4

If your parents live in a nursing home, they can't be your dependent.

It is true that dependents who are not relatives need to live with you, but that rule doesn't apply to your parents or your children. If you support your parents, you can claim them as your dependents no matter where they live.

Myth #5

Money you inherit is taxable to you.

If there is an inheritance tax to be paid, it is paid by the estate of the person who died, and not by you. The same is true of gifts you receive. And by the way, gifts you give to another person are not deductible on your income tax return.

Myth #6

If you and your spouse have separated but aren't divorced, you have to file a joint return.

In actuality, you have two more options: you can file as Married Filing Separately, or if you qualify and have children at home, as head of household. If you file jointly, you'll be liable for all the taxes on the return, not just your share.


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