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Tax time is fast approaching with the April 15th, 2015 tax deadline right around the corner - many people are scrambling to get their tax paperwork and information organized to ensure the best possible return. The name of the IRS game is exactly that – a game, and it's a game we want to be able to play well and ultimately win by either paying very little tax to Uncle Sam or ideally cashing a fat return.
Depending on how complex your return might be, you may or may not want to prepare it yourself. If you are a single parent on a fixed income, then you could easily do it yourself with an online tax service, however; if you are in business for yourself, with various deductions and even some investments to consider you may want to hire a professional. No matter your tax situation, here are some interesting tax myths and their realities for you to consider:
1. Claiming A Home Office Deduction Will Get You Audited Every Time
This deduction will not get you audited every time you claim it; however, because it is a common deduction that many people claim incorrectly it is a deduction that the IRS does take time to ensure is correct on your tax return. Just follow the instructions and be sure your office is a room that you use exclusively for office work, and that you have documentation in place if you need to prove it. Done correctly this is a deduction that most people that work at home should try to claim.
2. You Must File By April 15th
This is also not true. What you need to have in by April 15th is either your tax return or you need to file an extension to request more time. Keep in mind that if you are sure you owe money, you still need to get ninety percent of what you owe in on time – this is just a filing extension; it is not a tax payment extension.
3. Only Large Businesses Qualify For Health Care And Other Tax Credits
With the Affordable Care Act in place, many employers do not have to concern themselves with paying health care; however, if you are a small business that still pays for this you may qualify for the Small Business Health Care credit with as little as twenty five employees. A common mistake for may small business owners is that they fail to seek all the deductions they can get, so be sure to consult with a tax professional before you assume your business is too small for substantial tax credits.
4. A Large Tax Refund Is A Good Thing
While getting money back from the government is great; getting too much back you might want to consider looking at your financial situation. You are probably giving too much to the government to somewhere, so consider withholding more for yourself and investing that money where it can earn for you. Giving the government too much estimated taxes each year is giving the government an interest free loan that would serve you better if you placed it elsewhere.
The best advice always is to keep up-to-date records and keep honest with your return. Careful planning and taking your time each year will ensure you less stress at tax time and hopefully more money in your pocket!