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“I’m From The Government And I’m Here To Help.” And Other Myths.
Posted By Joseph S. Reisman On January 17, 2013 @ 1:00 pm In News & Features | 3 Comments
Telling Tips is a series of articles from local experts to help you save money, make better decisions and plan for a better future.
These are a few myths I hear during the tax season:
Students Don’t Have To Pay Taxes: Wrong. Anyone who works has a possible obligation to pay tax. Depending upon the amount earned, there may not be any tax, but just know that a student is not in a special ‘no-tax’ category. A summertime employer may incorrectly classify a student as an “independent contractor,” sending a 1099-Misc form at year-end. If this is received, and the amount is more than $400, there will be social security tax of 15.3 percent due on that amount.
My Child Cannot Be My Dependent Because S/He Worked: Wrong Again. A qualifying child must meet five requirements:
I Can Sell My House Tax-Free Because I’m Over 55 Years-Old: Nope. That was the old law. The new rules give you a better tax break. As long as the property was your principal residence for at least two out of the last five years, you have a tax-free gain of up to $250,000 ($500,000 on a joint return). Your age is irrelevant. In fact, you can flip your house every two year, and not pay a penny tax.
Married People Have To File A Joint Return: Wrong. You may file as “married filing separately.” Normally, filing separately does not save tax, but there are a few exceptions:
There are a number of other myths as well, so if you prepare your own return, make sure you are up to date on the tax laws.
And by the way, the above are only general comments — there’s an “if” and “but” in every situation.
Have a good week.
Quip: Are you an accountant? If you tell your wife that you cannot answer the question: “Do these jeans make my butt look big?” because you lack independence, and there may be a conflict of interest, you might be an accountant. And, if your wife buys that explanation, she might be an accountant.
Joseph Reisman, of Joseph S. Reisman & Associates, has been serving tax prep and business accounting expertise from his Coney Island Avenue office for more than 25 years. Check out the firm’s website.
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