7 Myths About the IRS

The Internal Revenue Service (IRS) is a central figure in the financial lives of Americans. Every year, individuals and businesses engage with tax professionals or the IRS to fulfill their tax obligations. Despite its ubiquitous presence, misconceptions about how the IRS operates are widespread. These misunderstandings often influence decisions and cause stress, particularly after tax season when people reflect on their filings.

It’s common for people to ask themselves whether they filed correctly, or even if they have the money to pay the IRS what they owe. It’s more than understandable when the stakes are so high. Addressing common misconceptions may alleviate some of those anxieties and help empower those who need help facing the IRS.

Common IRS Myths and Realities

Myth 1: Filing a Tax Extension Increases Audit Risk

Many believe that filing an extension of time to file your personal income tax return until October 15th raises red flags with the IRS, leading to audits. However, filing an extension merely extends the deadline for submitting your tax return and does not affect your audit risk. The IRS uses specific criteria to select audits, focusing on inconsistencies and statistical anomalies rather than the fact that an extension was filed.  However you should keep in mind that the extension only applies for filing your tax return; your tax payment is still due on April 15th.

Myth 2: All IRS Communications are Scams

With the rise of fraudulent schemes, there’s a growing belief that all contacts from the IRS are scams. While caution is necessary, the IRS does contact taxpayers for legitimate reasons, such as audits and collections. The most common means of communication by the IRS is by mail. They will sometimes visit taxpayers in person.  The IRS generally does not call taxpayers on the telephone. The key is to verify any communication directly with the IRS to ensure its authenticity, and do not provide personal information over the telephone.

Myth 3: Students Don’t Need to File Taxes

There’s a misconception that students are exempt from filing taxes. In reality, the requirement to file depends on income, not student status. Students with income above the standard deduction must file a tax return, which could lead to refunds or credits like educational deductions.

Myth 4: The IRS Will Correct All Mistakes on Your Return

Some taxpayers believe that the IRS will fix all errors on a submitted return. While the agency may adjust basic mathematical errors, the responsibility for accurate reporting of income, deductions, and credits lies with the taxpayer. It’s crucial to ensure all information is correct to avoid complications.

Myth 5: Amending a Tax Return Triggers an Audit

Amending a return is often seen as a trigger for IRS scrutiny. However, submitting an amended return does not automatically increase audit risk. Corrections are part of complying with tax laws and show the IRS that you are taking steps to rectify mistakes.  That being said, you are not necessarily required to file an amended tax return, and should discuss that decision with a tax lawyer.

Myth 6: Higher Income Always Results in Higher Tax Rates

The belief that higher earnings always lead to higher tax rates ignores the progressive nature of the U.S. tax system. While tax rates increase with income, deductions and credits can significantly lower the effective tax rate, meaning more income does not always equate to paying more in taxes proportionally.

Myth 7: The IRS Has Finished With You Once Your Return is Processed

Finally, there is a belief that once the IRS processes a return, the matter is concluded. However, the IRS can audit or question items on your tax return for up to three years after filing, or longer in cases of significant errors.

Myth Busting with Your Legal Team

If you have concerns or questions about your tax situation, especially in light of these myths and realities, consider seeking professional guidance. A consultation with knowledgeable professionals can provide clarity and confidence in handling tax matters. To schedule a consultation and learn more about how you can navigate your tax responsibilities, contact Weisberg Kainen Mark at (305) 374-5544.

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Weisberg Kainen Mark, PL

As experienced trial lawyers with a passion for justice, our firm provides clients with compelling advocacy, attorney availability, and creative solutions to your tax or criminal law matters.

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