5 common tax myths to know before filing your return

5 common tax myths to know before filing your return

  • You may have heard that tax refunds will be much smaller this year, or that you can’t file your tax return for free.
  • Know the facts when you’re filing your taxes this season. Here’s a look at some common tax myths.

• Fact: Federal income tax returns are due April 18, 2023.

A recent survey found nearly 7 in 10 people did not know Tax Day is April 18 this year. One of the biggest tax myths is that tax returns are always due on April 15. If that date falls on a weekend or holiday, Tax Day is the next weekday. 

This year, the due date is April 18 because April 15 is a Saturday and the next weekday, April 17, is recognized as a holiday, Emancipation Day, in Washington, D.C. The IRS says, by law, that D.C. holidays affect tax deadlines for everyone the same way federal holidays do.

Some taxpayers may get even more time to file. And those who live in disaster areas in California, Alabama or Georgia will have a much later due date — Oct. 16, 2023 — to file their federal tax return and pay their tax bill if they have one.

• Fact: If you owe the IRS money, you must pay by Tax Day to avoid interest and penalties.

You can get an extension to file your taxes by filling out a specific IRS document (Form 4868) that will give you six months — until Oct. 16, 2023 — to file your tax return, but not more time to pay your taxes. You can also get an automatic extension to file when you make an electronic payment with Direct Pay on IRS.gov.

The IRS says you should estimate and pay any owed taxes by your regular deadline to help avoid possible penalties. And you have to file your extension request no later than the actual due date of your return. Also, penalties are greater if you owe a tax bill and don’t file than if you file a return and owe but can’t pay the full tax bill at the time.

In the future, make quarterly tax payments regularly or set up a payment plan, said Shiloh Johnson, a certified public accountant and founder of Complyant, a Los Angeles-based startup to help small business owners do their taxes. Then, “if you need to file an extension, you don’t have a payment due because you would have been making those payments throughout the year.” 

• Fact: If you made $73,000 or less in 2022, use an IRS Free File provider to file taxes at no cost. Above that amount? Use Free File Fillable Forms to do your tax return.

Get access to free, online tax prep and filing by using an IRS Free File provider. If you made $73,000 or less in 2022, you could use Free File to do your taxes. If you earned above that amount, you can use Free File Fillable forms found at IRS.gov to do your taxes on your own online.

Nora Carol Photography | Moment | Getty Images

Use the IRS Free File online lookup tool to find the best tax software match, based on your location, income, and particular credits and deductions. Tax providers may have their own stipulations about income levels and other requirements to file for free. That tool will let you know which tax prep providers may work best for your situation — and which providers will also do your state tax returns for free.

And if you want to talk to someone in person, there are Volunteer Income Tax Assistance, or VITA, centers around the country that will help people making $60,000 or less and places that offer Tax Counseling for the Elderly, or TCE, for those who are 60 or older. 

• Fact: You are ultimately responsible for all information on your tax return, no matter who prepares it.

So, choose your tax preparer very carefully. Go to the “Choosing a Tax Professional” page on the IRS website for information about the tax preparer’s credentials and qualifications. The IRS recommends following these steps:

  • Look for a preparer who is available year-round in case questions come up.
  • Avoid any tax professional whose fees are based on your refund or who claims they can get you a bigger refund than a competitor.
  • Always review your tax return before signing it.  

Take the time to compare this year’s tax return with last year’s, said Marinela Collado, a CPA and CFP at Tobias Financial Advisors in Plantation, Florida. Taxpayers should “see what’s changed and what they could have done differently.” 

“Now is the time to make those changes proactively for 2023,” she said. “You can’t make changes after the year has come to a close.” Working with a tax professional year-round may help you avoid repeating the same mistake.

Sign up for CNBC’s Women & Wealth event: Join Sharon and other personal finance experts, including Suze Orman, at CNBC’s Women & Wealth event on April 11. They’ll talk about ways women can increase their income, save for the future and make the most out of their money. Register at CNBCEvents.com for this free virtual event.

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