3 Dangerous Tax Myths You Can't Afford to Believe

Don't fall victim to misinformation.

You could conceivably spend days reading up on taxes while still lacking critical information about the U.S. tax code. And that's unfortunate.

What's also not great is that the internet can be home to a host of bad tax information. And if you fall victim to the wrong myths, it could cost you. With that in mind, here are three specific tax myths you'll appreciate having debunked.

1. You can claim a home office deduction as long as you work from home

Many people are working from home these days in the wake of the pandemic. That's a perk that may be saving you money in different ways, from cheaper auto insurance to lower childcare costs. 

But just because you're working from home doesn't mean you can automatically claim a home office deduction. And if you claim that deduction when you're not entitled to it, your tax return might get audited. 

Before you even think about claiming a home office deduction, there's really just one question to ask yourself: Am I self-employed? If you're not, then that deduction is off the table -- end of discussion. 

Even if you are self-employed, it doesn't automatically mean you can claim a home office deduction. To qualify, that office must be your primary place of work and your office space must be used for work purposes only. But the bigger misunderstanding tends to come in the form of people who are salaried workers thinking they can claim this deduction when it isn't on the table.

2. You won't get audited if your accountant signs off on your tax return

Hiring an accountant or tax professional could reduce your chances of getting audited, since that person will know what deductions you're eligible for and can stop you from claiming tax breaks you're not entitled to. But hiring an accountant does not guarantee that you won't end up with an audit on your hands.

There are certain factors that can lend to a greater likelihood of getting audited, like having higher earnings or a large amount of deductions relative to your income. These are things your accountant can't control. But don't assume an audit is out of the question just because you've brought in a professional -- and make sure anyone you hire for tax help is willing to offer audit support should it become necessary.

3. The IRS must let you know if you've missed out on credits or deductions you're entitled to

The tax code is loaded with credits and deductions that could reduce your tax burden substantially. And if you hire a tax professional, chances are, you won't miss out on any of the ones you're entitled to. 

But if you file your taxes on your own, the same may not hold true. And if you think the IRS is going to come chasing after you to make sure you claim the right credits and deductions, think again.

As Mark Steber, Chief Tax Information Officer at Jackson Hewitt, explains, "The IRS is not in the business of making sure that you got all of your benefits." If you're entitled to the Earned Income Tax Credit, for example, and you fail to claim it, that's on you. The IRS isn't going to send you a check for that credit if you don't claim it on your tax return. 

Falling victim to these specific tax myths is something you don't want to do. Now, the good news is that we've just gotten to the bottom of them. But there's still a lot of incorrect tax information floating around, so if you're not sure what to believe, ask a tax professional. It's their job to know the tax code inside and out, and they'll be able to give you good advice so you're not led astray.