Some Tax Misconceptions that Many People Continue to Believe In

People believe that if they have already been filing for their taxes for so many years, they become experts in filing procedures and requirements. However, unless you are a tax professional, it will be difficult for you to remain updated with all the changes since the tax code is undergoing revisions almost annually and there are hundreds of different codes for almost all situations. Not only is it difficult to remain updated on tax knowledge, it's also hard to accept that some of what you believed to be true is either no longer true, or was in fact, never true at all. Every year, people file their tax returns while believing in a number of tax myths, hence they are either throwing away money or running into serious IRS problems.

A number of people believe that filing for a joint tax return is their only choice once they get married. This is simply a false belief. While the status of being married entitles you to filing a joint tax return, it does not mean that you should. In reality, you can actually use the alternative of 'married filing separately.' While filing under this will cost more than when using a joint return, certain cases would allow for some savings. Experts advise that households with two income earners should file using the two options and then assess which one is more advantageous. This should be done yearly as a person's responsibility change within a given year. In doing so, you'll find out that you can save money when using one option now and then save even more when you utilize the other alternative the next year. Just ensure that you talk it over with your spouse or you may have a bigger issue with the IRS.

Another misconception that costs taxpayers a considerable amount of money is trying to deduct their sales taxes. Until 1986, it was actually allowed for people to subtract some sales taxes for their purchases. In a few states, however, this law was re-instituted in one way or another. In 2004, 2006 and even 2007, people can subtract their sales taxes from the state tax or federal income tax. It should be noted however, that the deduction can only be made in either of the two, not both. Citizens of Wyoming, Alaska, Washington, Florida, Texas, South Dakota and Nevada received a significant break when this type of tax deductions was allowed. You may want to check on this policy's status every year just to ensure that you are still on the right track, and to avoid potential IRS problems.

Another misconception results from the fact that people still believe in a law that is no longer effective. In the olden times, anyone aged and older than 55 years old can exclude up to $125,000 in gains or earnings from taxes when his/her house is sold. This is a benefit that can only be taken once in a person's lifetime. The new rules now are actually better. In one amendment, the age requirement was no longer effective and the amount for exclusion was increased to $250,000 per person. Thus, a married couple may claim tax deductions up to $500,000 from gains made on the sale of a house. Later, the policy was revisited making the benefit available to anyone every two years. This means that every two years, anyone can sell a house and exclude up to $250,000 in gains from taxes.

 Darrin T. Mish is a Nationally recognized Attorney whose practice focuses on representing clients across the United States with IRS Problems. He is AV rated by Martindale-Hubbel and is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. He has been honored by a listing in Martindale-Hubbel's Bar Register of Preeminent Lawyers. His passion is providing IRS help to taxpayers with both individual and payroll tax problems. He teaches attorneys, CPAs and Enrolled Agents in the finer aspects of IRS representation all around the United States. He can be reached at his website at http://www.getIRShelp.com

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