CNBC: Don’t Believe These Five Tax Myths When Filing Your Taxes

You may have heard that many taxpayers will be in for a big surprise this tax season if they expect a big refund check, or a check that is even close to the amount they received last year. last, but it’s more of a “tax myth”.

Last year, according to the IRS, more than two-thirds of taxpayers received refunds. Year-to-date, the average repayment is $3,028 as of March 3, compared to $3,401 during the same period last year, a decrease of approximately 11%.

You may get a smaller tax refund this year because several tax credits, including the child tax credit, child care and dependent care credit, and earned income, have returned to pre-pandemic levels. . And the above-the-line deduction for charitable contributions up to $300 has been eliminated entirely.

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Get the facts when you file your taxes this season. Here are the facts behind four common tax myths:

Myth: Tax returns must be filed by April 15, 2023

Reality: Federal income tax returns are due April 18, 2023

A recent survey found that nearly 7 out of 10 people were unaware that Tax Day falls on April 18 this year. One of the biggest tax myths is that tax returns are always due on April 15th. If this date falls on a weekend or holiday, Tax Day is the next day of the week.

This year, the due date is April 18 because April 15 is a Saturday and the next day of the week, April 17, is a recognized holiday, Emancipation Day, in Washington, D.C. IRS says By law, we treat all DC holidays the same way they do federal holidays.

Some taxpayers may get even more time to file their return. And those who live in disaster areas in California, Alabama or Georgia will have a much later due date, October 16, 2023, to file their federal income tax return and pay their tax bill, if any. they have a.

Myth: File an extension if you can’t pay your tax bill now

Reality: If you owe the IRS money, you should pay before tax day to avoid interest and penalties

You can get an extension to file your taxes by filing a specific IRS document (Form 4868) that will give you six months, until October 16, 2023, to file your tax return, but no more time to pay your taxes. You can also get an automatic file extension when you make an electronic payment with Direct Pay at IRS.gov.

The IRS says you should estimate and pay taxes due before your usual due date to avoid possible penalties. And you must file your extension request no later than the actual due date of your statement. Also, the penalties are higher if you owe a tax bill and don’t file it than if you file a return and owe but cannot pay the full tax bill at the time.

Going forward, make regular quarterly tax payments or set up a payment plan, said Shiloh Johnson, a chartered accountant and founder of Complyant, a Los Angeles-based startup to help small-business owners do their taxes. . Then, “if you have to file an extension, you don’t have any payments due because you would have been making those payments all year.”

Myth: You can’t file your taxes for free

Fact: If you earned $73,000 or less in 2022, use an IRS free file provider to file your taxes at no cost. above this amount? Use Free File’s fillable forms to file your taxes

Access free online tax preparation and filing using an IRS free file provider. If you earned $73,000 or less in 2022, you can use Free File to do your taxes. If you have earned more than this amount, you can use the Free File fillable forms found on IRS.gov to do your own taxes online.

Use the IRS Free File online search tool to find the best tax software, based on your location, income, and individual credits and deductions. Tax providers may have their own provisions on income levels and other requirements for free filing. This tool will let you know which tax preparation providers are best suited for your situation and which providers will also do your tax returns for free.

And if you want to talk to someone in person, there are Volunteer Tax Assistance Centers, or VITAs, across the country that will help people earning $60,000 or less and places that offer tax advice for the elderly, or TCE, for those who are 60 or older.

Myth: If you go to a tax preparer and there are errors in your return, you will be liable

Fact: You are ultimately responsible for all of the information on your tax return, regardless of who prepares it.

Therefore, choose your tax preparer very carefully. Go to the “Choose a Tax Professional” page on the IRS website for more information about the tax preparer’s credentials and qualifications. The IRS recommends following these steps:

• Look for a preparer who is available year-round in case questions arise.
• Avoid any tax professional whose fees are based on your refund or who claim to be able to get you a bigger refund than a competitor.
• Always check your tax return before signing it.

Tax tip: Compare this year’s return to last year’s

Take the time to compare this year’s tax return with last year’s, said Marinela Collado, CPA and CFP of Tobias Financial Advisors in Plantation, Florida. Taxpayers should “see what has changed and what they could have done differently”.

“Now is the time to proactively make these changes for 2023,” he said. “No changes can be made after the end of the year.” Working with a tax professional throughout the year can help you avoid making the same mistake again.

Join CNBC’s Women and Wealth event: Join Sharon and other personal finance experts, including Suze Orman, at CNBC’s Women and Wealth event on April 11. They will discuss ways women can increase their income, save for the future, and get the most out of their money. Register on CNBCEvents.com for this free virtual event.

This article was originally published in English by Sharon Epperson for our sister network CNBC.com. For more on CNBC, head here.