Ever hear someone relate an outrageous tale they heard from a friend? At Snopes.com, such "urban legends" are debunked (except for the few that are true -- those are bunked).
Now that we're in the thick of tax season, here are a few related to taxes:
- African-Americans are entitled to a $5,000 tax credit as reparation for slavery.
Nope, not true. This myth has been used to con people out of money: Someone promises to file "required" paperwork in exchange for payment.
Whether you're African-American or not, there are some tax credits you should know about. For example, the child tax credit offers up to $1,000 per qualifying child. Also, you can get back more than $10,000 in qualifying expenses to adopt a child. There are many more credits, such as credits for the elderly or disabled, education credits, and even credits for making energy-saving improvements in your home.
- When the IRS began requiring taxpayers to include the Social Security numbers of dependents on their returns, several million children suddenly disappeared.
Think it's true? Well, it is. This is why the IRS has to conduct audits -- because many people, when they see an opportunity, will cheat on their taxes.
How many people cheat? It's impossible to pinpoint, but according to a Pew Research Center survey, 79% of Americans thought that not reporting all income on taxes was morally wrong. That means that 21% were OK with it.
- You can avoid being audited by not using the preprinted labels you receive with your tax forms.
This is false. Many audits are random.
You'll always face a chance of being audited, but you can reduce those chances. For example, the IRS looks for hints of unreported income, for unusually high or low numbers (such as very generous charitable donations), for allowances for bad debt, and for unexplained itemized items (feel free to explain anything unusual). Learn more.
You'll find many tax tips and tricks in our Tax Center. Here's one: IRAs can save you a lot of money at tax-time -- and they're great places for investments that pay out a lot of taxable income, including high-yielding dividend payers such as Home Depot
Longtime Fool contributor Selena Maranjian owns shares of Home Depot and PepsiCo. Home Depot is a Motley Fool Inside Value recommendation. Try any of our investing services free for 30 days. The Motley Fool is Fools writing for Fools.