(FinancialHealth.net) – Tax season is something most people dread year round. Will I owe this year? Have I filed everything correctly? Should I pay a tax professional to do my taxes? And so many more questions. Before filing taxes, you should be aware of some of the most common myths:
Filing a tax return is optional
No, it’s not. Filing taxes is mandatory if you have taxable income, also known as adjusted gross income. That’s your salary less any exemptions or deductions you’re allowed. This income includes bonuses, tips, wages, investment income, salaries and unearned income.
Financial Planner Greg McGraime explains more:
You have until October 15 to pay if you filed for a tax extension
The Internal Revenue Service (IRS) expects you to pay any taxes owed by April 15, whether you filed for an extension or not. If you don’t, you’ll be charged fees and penalties, so it’s better to get it in on time to avoid paying more.
Your Social Security won’t be taxed during retirement
This is a common misconception. The truth is, about 85% of your Social Security benefits are taxable at the federal level. Additionally, 13 states tax them as well. Those states are:
- West Virginia
- Rhode Island
- North Dakota
- New Mexico
Be sure to factor those taxes in when you’re creating a budget.
Filing taxes can be confusing, so just like anything else, the key is to learn as much as you can beforehand. It’s especially important to do so when you’re going through a life change, like entering retirement. If you have any questions, contact an IRS agent or consult a tax professional for more information.
~Here’s to Your Financial Health!
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