3 tax myths that may cost you money, and reduce your refund this year

Tax season is when many people get advice from friends, family, or social media about filing taxes. But not all advice is correct, and believing wrong tips can create problems when you file your tax return. Experts say some common tax myths can slow down your tax filing process or even affect how much refund you receive. That is why it is important to know the facts before filing your taxes.

Financial experts also say you should talk to a tax professional if you have questions about your own tax situation. Every person’s income and taxes can be different.

Myth 1: You should not file taxes if you don’t owe money

Many people think they only need to file taxes if they owe money to the government. But this is a common tax myth, as per GoBankingRates. Filing taxes is not only about paying taxes or getting a refund. It is mainly about reporting the income you earned during the year.


The Internal Revenue Service (IRS) says you must file a tax return if your income crosses certain limits. For example, if you are single and earn $15,750 or more in a year, you must file a tax return. If you are married and filing taxes together, you must file if your combined income is $31,500 or more and both spouses are under age 65, as stated by GoBankingRates.

If both spouses are older than 65, the income limit to file taxes increases to $33,100. These income limits can change every tax year, so taxpayers should always check the official IRS website for the latest numbers. Even if your income is below the limit, you can still file taxes if you want to. Filing in this situation is optional.

Experts say filing anyway could help you claim refundable tax credits. These credits can give you money back even if you paid little or no tax. Examples include the Earned Income Tax Credit (EITC) and the Child Tax Credit. These programs can increase your tax refund.

Myth 2: A big tax refund means you filed your taxes perfectly

Many people believe getting a large tax refund means they did their taxes the right way. But this is not always true. A large refund may simply mean too much money was taken out of your paycheck during the year for taxes. In that case, the government just kept extra money from your paycheck and returned it to you later when you filed your taxes.

Financial experts say this means you gave the government an interest-free loan during the year. Instead of waiting for a tax refund, you could use that extra money during the year. For example, you could keep the money in a high-yield savings account and earn some interest on it, as GoBankingRates says. You could also invest the money or use it to pay your daily expenses during the year. Using the money earlier can also help you avoid taking loans or getting into debt.

Myth 3: You cannot claim work-related expenses anymore

Tax rules change often, and this can confuse many people. Things like income limits, deductions, and tax rules may change over time. Because of these changes, some people believe that work-related expenses cannot be deducted anymore. However, this belief usually comes from confusion about the new rules. But this is another tax myth. People who run a small business or do freelance or gig work can still deduct many work expenses.

These deductions apply to expenses that are needed to run or operate their business or freelance work. If taxpayers forget to claim these deductions, they may lose money on their tax return, as stated by GoBankingRates. Missing eligible deductions can reduce the size of your tax refund or increase how much tax you owe.

FAQs

Q1. Do I need to file taxes if I did not earn much money?

Yes, you may still want to file taxes because you could qualify for refundable tax credits that give you money back from the government.

Q2. Does getting a big tax refund mean I filed my taxes correctly?

Not always, because a large refund can simply mean too much tax was taken from your paycheck during the year.