4 Common Myths About Taxes

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Source: http://www.flickr.com/photos/68751915@N05

Source: http://www.flickr.com/photos/68751915@N05

It’s not that surprising that there’s a lot of misinformation out there about taxes. The U.S. tax code is over 4 million words long and not one of us has the time to go through it all. Most of us treat the tax code like the monster it is, interfacing with it only from a distance and once a year paying homage to it in the form of a tax return.

Since there’s so much to know about taxes and so little willingness to learn about them, people sometimes make assumptions about how the system works that turn out to be false. These bits of false information sometimes take on a life of their own and, unfortunately, become common knowledge. This is problematic because a misunderstanding of how the tax system works can have consequences — most personal financial planning requires a basic, and reality-based, understanding of how taxes work. Otherwise, you could find yourself owing a lot more money than you expected — or, at least, worrying about irrelevant details when you should be relaxing.

For Americans already spending nearly 24 hours each year filing taxes, there’s no need to add another minute. Here are a couple of common myths and misunderstandings about taxes, and what’s really going on.

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