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The perils of misunderstanding tax laws

| Nov 6, 2019 | Income Taxes

The tax code can be confusing to taxpayers in Georgia and throughout the country. However, it is important to know the difference between fact and fiction when it comes to paying taxes and filing returns in a timely manner. Those who earn money from a side gig will need to pay taxes on that income, but it is their responsibility to make payments on a quarterly basis.

Another mistake that individuals make is to assume that they won’t be audited based on their income. Overall, about 1% of tax returns are selected for audit in a given year. However, the rate was just over 2% for those who filed a tax return claiming that they hadn’t make any money in 2017. Therefore, it is important that taxpayers file accurate returns regardless of how much they make as any taxpayer could face an audit.

Taxpayers may believe that there is no reason to itemize on their tax returns. While many may benefit from taking the standard deduction, that isn’t the case for everyone. For instance, those who have mortgage interest may want to consider itemizing as well as those who donate large sums of money to charity. In 2019, the standard deduction is $12,200 for single filers and $24,400 for those who are filing jointly with a spouse.

Anyone who has questions about federal tax law may want to consult with an attorney. The same may be true for taxpayers who have received an audit notice and need insight into how they should respond. Tax attorneys may be able to represent those who are involved in tax disputes, and they may be able to negotiate directly with the IRS on a taxpayer’s behalf. This might increase the chances of a dispute being resolved in an individual’s favor.

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