All individuals and businesses undertake tax planning at least once a year. Despite the fact that everyone pays them, there still seems to be some confusion around taxes. While you should always consult with a tax professional for guidance on your unique situation, here are some tax myths to be aware of.

3 Tax Myths Debunked

1. Married Couples Must File Jointly

Married couples who choose to file together enjoy greater tax breaks. If you file with your spouse, you’ll only be taxed 10% on the first $19,750 of your income versus the first $9,875 if you were to file separately. Nonetheless, if you and your spouse prefer to keep your finances completely separate, you may still file as individuals.

2. Tax Extensions Allow Delayed Payments

While a tax extension gives you additional time to file, it doesn’t grant you extra time to pay. You must still pay your estimated income tax by April 15. Should you fail to pay on time, you can face fines.

An extension is a convenient option if you’re missing information needed for tax planning, such as a Form 1099 that arrives too late to make the deadline. By requesting an extension, you can avoid the failure to file penalty, which could be up to 25% of your taxes owed.

3. Itemized Deductions Are Always Best

During tax planning, you can either opt for the standard deduction offered by the IRS or itemized deductions. Itemized deductions allow you to claim expenses, such as taxes paid, interest, charitable donations, and medical bills, and deduct them from your taxable income.

However, it’s only worth selecting the itemized deductions if their value exceeds that of the standard deduction. For the 2019 tax year, the standard deduction was $12,200 for single individuals or married people filing separately or $24,400 for married couples.

To ensure you maximize your deductions and satisfy legal requirements, enlist the help of Tudor Wilson & Associates CPAs, LLC, in Honolulu for tax planning. These tax experts have served the community since 1999 and specialize in accounting for both businesses and individuals. Browse through their services online, or call (808) 592-2000 to make an appointment.