Each time tax season approaches, people start talking about ways to get a bigger return or precautions to take in order to avoid an audit. While it makes sense to try to learn as much as you can about filing your taxes effectively, you also need to protect yourself. There’s a lot of misinformation out there, and you can’t always believe what you hear or read.<\/p>\n\n\n\n
It’s extremely important to file your taxes correctly. Doing so ensures you get the refund you deserve and also keeps you from getting in trouble with the IRS. You may feel like hiring a tax professional<\/a> is the only way to have peace of mind when filing your taxes, but it’s entirely possible to take care of them yourself.<\/p>\n\n\n\n To help you out, we’re debunking four common myths about filing a personal tax return. Knowing the truth could help you avoid a big headache.<\/p>\n\n\n\n Many people end up scrambling to file their taxes by the April 15 deadline. If you find yourself in this situation, you have an option to file for an extension. This simply means you’re given more time to get your taxes in order and submit them. However, if you know you’re going to owe taxes instead of receiving a return, this extension doesn’t lengthen the time you have to pay the IRS.<\/p>\n\n\n\n On the surface, this may sound a bit confusing. If you get an extension and file your taxes a few months later than the deadline, aren’t you automatically getting an extension on your repayment? Not exactly. After April 15, you’ll start incurring a failure-to-pay fee each month. Think of this as interest on the amount you owe. This penalty is typically 0.5%.<\/p>\n\n\n\n The last thing you want is to owe the IRS more than you already do. That’s why it’s advisable to prepare your taxes ahead of time and avoid filing an extension. You should also consider calculating what you’ll owe using the IRS tax table. That way you can put enough money aside leading up to tax season.<\/p>\n\n\n\n Getting audited by the IRS won’t ever happen to you, right? Hopefully it won’t, but a lot of people think that and end up having their taxes scrutinized. According to an IRS data report<\/a>, 1 million tax returns were audited in 2017 alone. While an audit isn’t the end of the world, it can definitely be nerve-wracking.<\/p>\n\n\n\n It seems logical that once you’ve filed your taxes and received your return, you’re exempt from the IRS taking a closer look. However, this isn’t how it works at all. In fact, getting a refund only means your taxes have been received and accepted by the IRS. Whether you get audited or not is determined down the road.<\/p>\n\n\n\n After filing your taxes and receiving your refund, your return will be checked digitally against a model. This check will result in what’s referred to as a Discrimination Information Function (DIF) score, which is based on inaccuracies on your taxes. Returns with high scores are reviewed by an IRS agent to determine whether an audit is necessary.<\/p>\n\n\n\n It could take the IRS several months to start the audit process. In some cases, an audit may even occur years after a return was filed.<\/p>\n\n\nFiling an Extension Also Gets You a Payment Extension<\/h3>\n\n\n\n
After You’ve Received Your Return, You Can’t Get Audited<\/h3>\n\n\n\n