Craziest Things Clients Get Wrong About Taxes
April 8, 2015 4:30 PM
Craziest Things Clients Get Wrong About Taxes
Overflowing shoeboxes and a lack of basic documents arent the only things taxpayers bring into their tax preparers this time of year: They also bring along some pretty ridiculous ideas about the tax system.
We interviewed a number of tax pros about strange client misconceptions theyve encountered; you can read the full story here. In the meantime, weve collected some of our favorites here, as well as some suggested by readers in response to our original story. -- Accounting Today Staff
Income taxes are unconstitutional.
Many taxpayers are either unaware of -- or simply dont believe in -- the 16th Amendment.
Getting a refund means they didnt pay taxes.
Some taxpayers believe that a refund is an indication that they didnt pay any taxes; more often, it means that they had too much deducted from their paycheck.
Cash is not income.
Oh, but it is it really is.
If youre older than 70, you dont have to pay taxes.
The actual age cited may vary, but a disturbing number of taxpayers believe that there is some magic age after which you are exempt from taxes. There isnt not even death is a bar to some taxes.
Social Security cancels taxes.
On a closely related note, some taxpayers think that once they start drawing Social Security, they no longer have to pay taxes or file a return but theyre only safe from taxes if they have no other income besides the Social Security benefit.
Pets are dependents.
Many taxpayers want to deduct their dog or cat, but theyre not dependents just mooches.
Tax preparers work for the government.
While some clients want their tax pro to cheat on their behalf, others go to the opposite extreme, believing that their preparer works for the government or on the governments behalf. While some of the due diligence requirements forced on tax pros recently dont help this impression, the fact remains that a tax pro can be a taxpayers best friend, and their best advocate with the tax authorities.
The Jan. 31 deadline.
Some tax pros report having clients who think that if they didnt receive a W-2 or 1099 form by Jan. 31, they dont need to include it in their return.
Notary publics are tax professionals.
This one was brand-new to us but it speaks volumes about the publics understanding (or lack thereof) of who tax professionals are and what they do.
No refund, no fee.
This is probably the most pernicious taxpayer misconception: the idea that if you dont get a refund, you dont have to pay your tax preparer.
