Busted! Don’t Believe These Tax-Related Myths!
Who wouldn’t want a significant tax return or a substantial amount of deduction on the taxes they owe? While the answer is everyone, not everybody is eligible for deductions and big returns. Unfortunately, there are a few bad apples in the field of tax accountancy that lure clients with the promise of getting them some tax bonuses.
The promise of bigger refunds is not something that people turn down often, but what they don’t realize is that they are the latest victims to fall prey to a host of misconceptions that are perpetuated by nefarious tax preparers. By falling for these myths, the tax-payer will face the brunt of the Internal Revenue Service (IRS) when they audit you.
At Edrien Inc., we are passionate about our profession and love to help people not just submit the tax returns and claim deductions legally, but also to avoid the prospect of an IRS audit. To help clear the air on tax filing, we have listed three of the most widely believed myths about taxes.
Myth 1: Deduction under Schedule A include work expenses.
The most common deductions under Schedule A (personal deduction) are mortgage interest, property tax along with state tax deducted from your paycheck which can be found under W2 box 17. Some preparers intentionally deduct work expenses such as meals and entertainment, mileage, and work expenses to obtain more deduction under Schedule A hoping that the IRS will not audit the client for such deductions. However, the IRS doesn’t hold a lottery on who shouldn’t be audited, which means that there are chances that you will be audited.
It is best to follow the rules with the IRS as a refund of a couple of hundred dollars may lead to having to pay a penalty that could be more than a thousand dollars. If the tax-preparer promises you a refund under Schedule A (work expenses), verify if they are certified with the IRS by clicking here - www.ptin.org.
Also, check to see if they sign their name under the tax return that they prepared for you. Many preparers claim that they are certified, but refuse to put their names on the returns to avoid accepting any blame in the event of an audit by the IRS.
At Edrien Inc., we have helped many clients in reducing the chances of an audit by the IRS by performing the tax amended return and revising their records to comply with the latest IRS rulings. Keep in mind that under the upcoming 2018 tax returns, work expenses will be removed and cannot be deducted under Schedule A.
Myth 2: Creating a fictitious business will ensure that you get a bigger refund.
Often, tax preparers coerce clients into creating Schedule C (business deduction) that are fictitious, with the promise that if they show a reduced AGI (annual gross income), then they will have to pay less tax and get a bigger refund. Falling for this myth will most likely get you audited by the IRS.
If you own a business, it is essential that you have your receipts and records in order and saved in a digital format or create your own bookkeeping system. You should keep your records for a minimum of seven years in case the IRS questions your business and deductions.
The professionals at Edrien Inc. have been in this business for many years, and we continually educate ourselves about the changes in tax laws. We also volunteer with the IRS to ensure that our practice is in accordance with the guidelines.
Myth 3: Anyone can claim child support-related tax deductions.
To claim child support deductions, you must give proof that you provided the child with shelter, food, and lodging for a minimum of six to twelve months. Often people and some tax preparers will intentionally set a deduction to obtain a bigger refund, although the person doesn’t meet the requirements. It is best to follow the rules of the IRS while claiming deductions. Trying to claim deductions without being eligible for them is illegal and could land you in hot water.
As the best tax accountants in Baltimore MD, at Edrien Inc. we believe in educating our clients to ensure that they don’t fall prey to myths like these. Irrespective of whether you’re a low-income family that needs to file their tax return for free, need assistance with filing your business tax returns or have been audited by the IRS, we are here to help. Our tax accountants are available 24/7, so feel free to call us anytime.
For a complete list of our services, please click here. If you have any questions about Edrien Inc. or taxation, we’d love to hear from you. Please contact us here.