3 Tax Myths You Can't Afford to Believe

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  • There's a lot of misinformation out there when it comes to taxes.
  • Certain misconceptions could cause you to make poor tax-related choices.
  • You will be financially responsible for mistakes in your tax return, and you can't claim your pets as dependents. 

Don't buy into any of these.

When you think about fun ways to spend an evening, you might land on a Netflix marathon, a night out with friends, or a few hours on the couch with a good book. But one activity you probably wouldn't classify as fun is spending time reading up on taxes

Not only is the tax code lengthy, but a lot of it is very confusing if you're not an accountant. And so it's easy to see why learning more about taxes may not be a top priority.

The problem, though, is that there's a lot of misinformation out there when it comes to taxes. And buying into it could cause you to make poor decisions. Here are a few tax myths you absolutely shouldn't believe.

1. You can deduct out-of-pocket expenses as a salaried worker

If you're self-employed, there are a host of deductions you're entitled to take. For one thing, if there's a dedicated area of your home you use solely for work purposes, you can claim a home office deduction. You can also deduct the cost of materials needed to do your job. If you're a writer, that means you can deduct the cost of a replacement laptop when your old one dies. If you're a freelance makeup artist, you can deduct the cost of brushes, lipstick, and so forth. 

But if you're a salaried worker, you don't get that same leeway -- even if you're incurring costs to do your job that your company won't reimburse you for. For example, you may decide to buy yourself a laptop to work on because the one your employer gave you is slow. Unfortunately, you can't take a deduction for that expense, nor can you write off the cost of commuting. And if you're a salaried employee who works from home a few days a week, the home office deduction won't apply to you.

2. Your accountant is on the hook for tax return mistakes

Many people hire an accountant to file their tax returns. But if your accountant makes a mistake that results in a penalty from the IRS, ultimately, it's on you to pay it -- not your accountant. That's why it's so important to vet accountants carefully before choosing one. You want someone who's easy to work with, has experience, and is up to date on their certifications. 

3. You can claim a pet as a dependent

If you have children living at home, you're allowed to claim them as dependents. That could make a difference when it comes to claiming certain tax credits, like the Earned Income Tax Credit. 

But while you may love your pet like a child, you can't treat them like one for tax purposes. And if you attempt to count your pet as a dependent, the IRS will have none of that. Similarly, you also can't write off the cost of animal-related expenses like food, medication, and pet insurance, the same way you can't write off the cost of feeding your own children. Sorry. 

The tax code may be long and complex, but it helps to read up on it a little bit. That way, you'll know what tax breaks you're entitled to, and you might avoid mistakes the IRS doesn't look kindly upon, like claiming deductions you're not supposed to.

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