Busted! Don’t Believe These Tax Myths!

The thought of taxes and tax season wipes the smile off several people’s faces. The complexities of keeping track of expenses and income, maintaining your books, updating yourself with the latest tax regulations and filing your returns are more than most people can handle. This is where bookkeepers and tax accountants step in to help make your life and tax filing an easier affair.

Unfortunately, people misunderstand tax regulations and are influenced by locker-room talk about how taxes should be filed and the amount of returns owed. This misinformation usually ends up with people believing that they have been wronged and have not received what they are due.

At Federated Tax Service, Inc., we understand precisely how taxes work and why people are left seething and confused. To help add some clarity to situations in which many people find themselves, we have debunked three of the most widely believed myths about taxes.

Myth 1: Some firms can provide a bigger tax refund to clients compared to other tax preparation companies.
Some tax preparation companies simply use this false fact as a marketing campaign to attract gullible customers to avail their services. The truth is that there are no guarantees to obtaining refunds. A professional tax preparation company will advise you on whether you are eligible for a tax refund and if so what is the tax refund amount which you can expect. Alternatively, professionals highlight scenarios in which clients will have to make tax payments from a compliance standpoint.

Tax experts also guide customers on optimal investment strategies to reduce their future tax liability as well as estimated tax payments going forward. Educating customers about various aspects that go into filing tax returns is also a responsibility taken very seriously by expert professionals.

Understanding whether a tax preparation company is merely making unrealistic promises or is genuinely interested in explaining why and how taxes were filed in a certain manner, along with recommending tax saving strategies helps the client hire a suitable expert.

Myth 2: Two people earning the same amount of money are both liable to pay identical tax amounts and receive similar tax refunds.
Contrary to popular belief, no two tax payments or tax refund situations are identical. Your tax outgoings or tax refund eligibility depends on how you planned your investments during the financial year. For example, some people build up a bigger tax refund by deciding to have more federal taxes withheld from their W2 wages. This approach is an excellent strategy for people who have a hard time maintaining a saving rate. Alternatively, people who are economical with their savings may choose not to have more than the exact amount of taxes deducted from their W2 wages and therefore not receive any tax refund. A good tax preparation company understands the financial objectives of their clients and provides the best strategy to meet their client’s needs.

Myth 3: Tax reforms make it easier to file returns.
It takes considerable time and effort for people to familiarize themselves with tax reforms as well as updated tax forms before they can reap the benefits of the revised norms. For example, the new twenty percent deduction rule for business owners and for those who can itemize has made the process confusing.

If people try to file returns by themselves but incorrectly update tax filing forms or fail to comply with the revised norms, they run the risk of having to file amended returns. Unawareness of the revisions also leads to people missing out on favorable tax advantages which have been recently incorporated. By hiring the services of a tax expert, clients can have peace of mind because their interests are well protected, and there is no scope of non-compliance or missing out on tax advantages as stipulated in the tax reforms.

If you’re looking to steer clear of these myths and gain the benefit of expert advice to meet your individual or business needs, reach out to Federated Tax Service, Inc.

As one of the best tax preparation and bookkeeping firms in the Chicagoland area, we help clients in preparing their tax returns accurately and advise them on tax saving strategies tailored to their needs. Our over twenty-five years of experience, along with our ability to assist clients with their needs irrespective of the complexity is something in which we take great pride. A customer-centric approach and personalized attention to every client is what drives our success.

For a complete list of our services, please click here. If you have questions or need guidance on your financial needs related to tax preparation or bookkeeping, please contact us by clicking here.