The world is full of tax advice this time of year, but not all of it is good. Some of it is just plain wrongheaded. Here are five misguided, worthless or flat-out bad pieces of tax advice that tax pros say they wish never existed.
An extension gives you more time to pay your taxes
Getting an extension gets you more time to file, not more time to pay. If you don’t have enough cash to pay your taxes, hand over what you can by April 17, then get on a payment plan with the IRS. As long as you are responsive and provide information when requested, the IRS typically doesn’t resort to wage garnishment or other scary stuff.
Don’t get an extension, you will get audited
Get an extension if you need it (but get it by April 17). Better to file later and correctly than to file in a hurry and make mistakes. You also can get a sense of your situation now by putting your numbers into a tax calculator.
You should buy real estate for the tax breaks
Although mortgage interest and property taxes can be deductible, buying real estate has to make sense for other reasons too. If you plan on moving soon or aren’t going to itemize on your tax return, or if houses are overvalued in the area, buying may not be a good idea.
A home office deduction will trigger an audit
No, it won’t. “We hear that every day,” says Jordan Amin, a CPA and partner at EisnerAmper in Iselin, N.J. “I don’t believe that the home office deduction gives rise to an audit any more than anything else does.” Take the deduction if you qualify, Amin said. “Even if you were to be audited, if you’re doing everything properly and accurately, then that would be fine.”
You don’t have to report money from a side hustle
Having a side job or getting paid wages in cash still counts at tax time. Report all of the income you earn — even if you were paid in cash and even if you didn’t get a W-2 or 1099 from the person who paid you. “That mentality of, ‘If I get cash, it’s not taxable’…. It just makes us wonder sometimes,” said Tyler Gibbons, a CPA in South Carolina