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Avoiding a Headache: 5 Common Tax Deduction Mistakes and Misconceptions

Posted by : Premraj | Posted on : Monday, February 3, 2020

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Getting your tax wrong can be a painful experience and could prove costly too, which is why it makes sense to learn about some of the common mistakes and misconceptions that could lead you to get it wrong, with costly consequences.

If you do find yourself on the wrong side of the tax authorities and they are asking some searching and worrying questions it would be good to have some extremely knowledgeable tax attorneys fighting your corner, in the meantime, you might want to try and avoid some of those mistakes in the first place.

You can’t make tax deductions for charitable contributions anymore

This is probably one of the most popular misconceptions and there seems to be a fairly widespread belief that charitable deductions are no longer possible in most circumstances.

It’s true that tax codes changed not so long ago and the Tax Cuts and Jobs Act introduced in 2017 seemed to put paid to charitable deductions.

In reality, what actually happened is the standard deduction level was raised and that made it less likely that an average taxpayer would be more inclined to opt for the standard deduction rather than itemizing.

It should be noted that the charitable deduction option is still very much alive, however, it now needs to be itemized and your combined itemized expenses need to be larger than the standard deduction.

Your tax refund may not be as big as you hoped

Weary taxpayers should not be surprised with the revelation that you might not get as much back from the taxman as you had hoped but there are still plenty of us who seem to think that their projections will yield a higher return.

The reason for this is the fact that tax withholding tables have been updated to reflect new tax law changes.

What this means is that you may have already been paid a portion of your potential refund in your monthly salary.

Personal exemptions are going to mean I pay more taxes

Although the standard deduction figure has doubled it may not turn out to be such bad news if you are married with a family.

The bottom line is that if you fit that profile there is a reasonable chance that you may even pay less in taxes rather than more.

It’s better not to file if paying your taxes is a problem

Although you can’t expect the IRS to take a charitable attitude to your poor financial circumstances it is a bad misconception to believe that it would be better to delay filing rather than face the consequences of being chased for what you owe.

It is a better strategy to file and try and negotiate a payment plan rather than rack up some hefty interest and penalty charges.

I can handle everything myself

Tax is a complicated subject and its easy to get things wrong.

Even when you make an honest mistake it could have dire and costly implications which is why it is often far better to employ a tax professional to run over your figures and an experienced tax attorney would be a good call if you are under the spotlight for any reason.

 

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