Tax Myths That Simply Aren’t True

 

            Let’s admit when it comes
to taxes it’s a complicated subject. There are myths concerning tax laws that
are commonly accepted. Busting a few of these myths can help better understand
how the tax system works and how it affects you as a taxpayer. Knowing more
about taxes can make the system work in your favor. Having a tax plan and
working with a tax professional like SWVA Tax & Accounting can help you. Here
are a few tax myths that aren’t true.

Myth #1 Taxes Are Not Due Until the Due
Date

Some
business owners believe you have to pay taxes in full at the due date. What is
more efficient is to have a year-round tax payment strategy. By paying taxes throughout
the year you can set up a payment plan that makes things easier. A year-round
tax payment strategy will help you with budgeting and influence decision making
how money is spent. Having a year-round tax strategy will help you focus and
keep your business in better financial health.

Myth #2 If You Have a Side Hustle You
Don’t Need to Pay Taxes

You
already have a main business that brings in income. Why not start something on
the side for additional income? This is a great idea and showcases your entrepreneurial
abilities. However, your money-making side hustle may not go unnoticed by the
IRS. If your side hustle earns more than $12,000 a year, you’ll have to pay
income taxes. Be careful of the amount of income your side hustle brings in.

Myth #3 The IRS Will Email You if You Are
Owed a Refund

This
myth is so untrue it’s almost funny. Almost. The IRS will never email you
saying you will be owed a refund due to an error. This is likely a phishing
scam targeted at getting you to send personal information as your bank account
number or social security number. If you get a suspicious email concerning the
IRS do not open any attachments or click any links. What is recommended is to
forward the email to
phishing@irs.gov and delete the email. Always safeguard your
personal information so you won’t be a victim of identity theft.

Myth #4 You Don’t Need a Receipt

If you are a small
business owner, always keep your receipts of anything you bought. The main
reason for keeping physical or digital receipts is, it makes preparing your
taxes easier at the end of the year. Another smart reason to keep all your
receipts is if you get audited, you can prove what you bought. Better to have a
receipt than no receipt at all.

Myth #5 Buying Bookkeeping Software Later When You Start A
Business

You started a business
and things in the bookkeeping department are a bit slow. Managing your taxes is
not a simple task and the last thing you need to do is fall behind in
bookkeeping. QuickBooks is a great tool to help you with all tasks related to
bookkeeping. Staying organized from the very start will help you hit the ground
running successfully.

Myth #6 A Home Office Can Be Written Off an Expense

If you are a small
business owner you may have a “home office” you work out of. Use caution when
trying to write it off as an expense. You can write off your home office as an
expense if it’s a dedicated work space. Sorry your dining room table does not
count as a home office. It has to be an actual workspace, where everything
related to the business is done. This means 100% of work is done related to the
business.

Busting a few myths
about taxes helps you be better informed. To get the latest tax information make
an appointment with SWVA Tax & Accounting. Call 540-250-3198 to make an
appointment or book online at
www.swvatax.com/#Contact to get a tax consultation today. Don’t
delay call SWVA Tax & Accounting today. We’ll run the numbers, while you
run the business.

 

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