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As the April 18 tax deadline quickly approaches, the Internal Revenue Service (IRS) published a letter with the top tax myths. The IRS continues to process 2022 returns. It reports that 90% of income tax refunds have been processed within 21 days. On March 31, the IRS noted it had sent almost 63 million refunds with a value of more than $183 billion. The average refund for this year is currently $2,910.
Each filing season, the IRS receives many reports of tax myths. These tax myths are believed by many taxpayers which cause them to make errors or mistakes in filing. The IRS urges all taxpayers and tax professionals to understand these tax myths so that taxpayers avoid making tax errors.
1. Do Not Report Income — Some taxpayers believe they only need to report income if they receive an IRS Form 1099. The fact is that all income is taxable and must be reported, whether or not you receive an IRS Form 1099 or other tax reporting form. Income includes profits on goods sold online, investment income, income from part-time or seasonal work, self-employment income or income gained through a mobile app. Exceptions to taxable income include money received as a gift or for reimbursements.
2. Extension Excuse — Many taxpayers are unable to complete their tax return by the filing date and file for a six-month extension until October 16, 2023. While the taxpayer is permitted to extend the filing date, taxes are still due on April 18. Failure to pay the tax due could result in interest and penalties. Taxpayers in FEMA disaster areas may be subject to different filing dates. You may check Tax Relief in Disaster Situations on IRS.gov to see if you qualify for an extension to file and pay tax.
3. Speed Up Refund — Some taxpayers believe that a call or visit to the IRS in person will speed up their refund. This is not correct. The proper way to track your refund is to use the "Where's My Refund?" tool on IRS.gov or your IRS2Go mobile app.
4. "Where's My Refund?" Is Not Accurate — A taxpayer may find that the expected tax refund is different from what was projected or it takes longer. The "Where's My Refund?" tool is generally updated once per day. However, if a taxpayer has a Child Tax Credit, delinquent taxes or past due child support, there could be a difference in the refund amount. The IRS will mail a letter if there is an adjustment in the refund.
5. Secret Refund Deposit Date — Taxpayers may think that ordering a tax transcript is a secret way to find out their refund deposit date. However, tax transcripts are only available to help verify your income and tax filing status. Tax transcripts will not affect your refund deposit date.
6. Do Not Adjust Withholding — Many taxpayers believe that if they receive a refund this year, they will not need to adjust their tax withholding. However, there are multiple reasons why you may want to use the Tax Withholding Estimator tool on IRS.gov. If you have a job change, have a significant change income, become married or divorced, welcome a child or purchase a home, it may be helpful to you to adjust your withholding.