Tax Myth #3: Can You Claim Your Pets as Dependents?
VERDICT: BUSTED
As much as we love our pets and spend a significant amount of money on them, the IRS does not consider them as dependents for tax purposes. However, there are ways you can leverage your pets on your taxes through deductions.
If your pet is a service animal or a therapy animal, you can deduct expenses such as training, vet care, food, and purchases related to them. The IRS allows these deductions to assist visually impaired, hearing disabled, or physically disabled individuals.
It is essential to keep detailed records to prove that your pet is indeed a service or therapy animal and that the expenses you are deducting are legitimate.
Additionally, if you have a guard animal for your business, you can also deduct expenses related to their care and training on your taxes.
ACTION STEP: Deduct your service animal and/or therapy animal’s expenses.
Make sure to explore the IRS guidelines on deducting expenses related to service animals to see if you qualify for these deductions.
Tax Myth #4: Can Your Accountant Be Held Responsible for Tax Mistakes?
VERDICT: BUSTED
Your accountant’s mistakes are not their responsibility but yours. To avoid financial risks, it is crucial to find a reputable accountant and double-check their work before filing your taxes.
Ensure that your tax preparer has a Preparer Tax Identification Number and is licensed to handle your tax returns. By verifying their credentials and reviewing their work, you can minimize the chances of errors leading to audits.
ACTION STEP: Find a reputable accountant and double-check their work.
Investing in a reliable accountant can save you from potential audit troubles down the line. Always prioritize accuracy and due diligence when it comes to handling your finances.
Tax Myth #5: Can You Deduct Your Home Office Expenses?
VERDICT: PLAUSIBLE
Deducting expenses related to your home office is possible, but you need to meet specific requirements set by the IRS. Your home office must be regularly and exclusively used for business purposes and serve as the principal place of your business.
ACTION STEP: Determine whether you qualify for a home office deduction.
Calculate the percentage of your home used for business, and based on that percentage, you can deduct a portion of your home-related expenses on your taxes. Ensure you meet all IRS guidelines before claiming this deduction.
Prepare for Tax Season
As tax season approaches, it’s essential to stay informed about tax myths and facts to navigate the process effectively. Check out our additional resources to help you prepare for tax season.
Have you come across any tax myths that make you raise an eyebrow? Share your thoughts on social media and let us know. For more tax myth debunking, visit our Instagram post and leave a comment on what myths we may have missed.