Tax season is here, and with it comes a flood of misinformation that could be costing you money. Many people believe tax myths that lead to missed opportunities and unnecessary stress. In this blog, we’re tackling some of the most common tax myths and setting the record straight—so you can file with confidence and keep more of your hard-earned money.
1. Myth: Your Entire Income is Taxed at One Rate
Many people think that once they earn more, all of their income is taxed at a higher rate. Not true! The U.S. tax system uses graduated tax brackets, meaning only the portion of your income that falls into each bracket is taxed at that specific rate. Understanding this can help with smart planning, like contributing to a 401(k) to reduce taxable income.
2. Myth: You’ll Be in a Lower Tax Bracket in Retirement
It seems logical—less work, less income, lower taxes. But in reality, many retirees end up in higher tax brackets due to Social Security, pensions, and retirement account withdrawals. Smart tax planning, like Roth conversions, can help control tax liabilities later in life.
3. Myth: Filing an Extension Means You Can Delay Paying Taxes
An extension only gives you more time to file—not more time to pay. If you owe taxes, they’re still due by April 15, and missing that deadline can result in penalties and interest.
4. Myth: No 1099-K, No Need to Report Income
Selling online or freelancing? Even if you don’t receive a 1099-K form, you still need to report all income. The IRS tracks transactions, and failing to report them could trigger an audit.
5. Myth: Only Wealthy People Get Audited
While high earners do get audited, most IRS audits are triggered by errors, missing income, or suspicious deductions—not just by how much you make.
6. Myth: A Big Tax Refund Means You’re Winning
A large refund isn’t a bonus—it’s a sign that you overpaid your taxes all year and gave the government an interest-free loan. Adjusting withholdings can put more money in your pocket throughout the year.
7. Myth: Tax Software is All You Need
Tax software is a great tool, but it doesn’t replace expert advice—especially if you have investments, own a business, or need tax strategies to lower what you owe. A tax professional can help optimize deductions and avoid costly mistakes.
✅ Talk to John White
Are you ready to get your financial house in order? Schedule a call with John White today! With over 30 years of experience helping families navigate the complexities of financial planning, John brings a wealth of knowledge and genuine care to every consultation.
At Financial Guideposts, we are passionate about guiding you to where you need to be to ensure you and your family live your best, most stress-free life. Our mission is to keep your family financially protected, no matter what happens. Let us help you achieve peace of mind and financial security. Schedule your call with John White now and take the first step toward a brighter financial future.
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