Some things in life are pretty much unavoidable and filing taxes is one of them. The thing is, even though we do it every year, a lot of Americans are confused by some of the basics involved. And new research reveals some of our biggest tax misconceptions.
According to a survey of 4-thousand U.S. adults who plan to file taxes this year:
- Filing taxes can be so overwhelming, 20% of respondents would rather deal with Black Friday crowds or go to jury duty.
- That may be because they’re so confused by the rules, even if they’ve been filing taxes for decades, like baby boomers. More than a quarter (27%) of them think you don’t need to file and can’t get a refund if you make less than the IRS income requirements.
- Gen Z believes that students don’t need to file taxes (20%), that you can write off anything as a business expense (17%) and that you don’t have to pay taxes if you’re paid in cash (13%).
- In reality, a business expense has to be something necessary and directly related to your business.
- And students and people making less than the IRS threshold aren’t required to file, but they should if they’ve had taxes taken out or are eligible for a refund.
- To make sure things are done right, many Americans turn to pros for help filing. Half of Gen X and 44% of baby boomers use tax software to file, while 54% of millennials use an online tax service and 32% of Gen Z get help from their parents.
- That’s probably a good thing since less than half of everyone polled (47%) could correctly match the term “earned income tax credit” with its definition.
- Only 52% know what a “standard deduction” is, and while many Americans are familiar with the terms “dependents” (67%), filing status (61%) and “tax deductions,” (59%), fewer know the meaning of “sole proprietor” (26%) and “cost basis” (13%).
- Other tax terms that confuse Americans most include “sole proprietor” (26%), “capital loss” (25%), “cryptocurrency tax rate” (8%) and both “below-the-line deductions” and “above-the-line deductions” (8%).
Source: Talker