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Tax Myths You Might Believe
And What You Should Know Instead
In partnership with
Hey Simplifiers,
Did you know that nearly half of Americans don’t fully understand taxes? 😱 According to a recent Newsweek poll, only 37% of Gen Z could correctly define the term ‘earned income tax credit,’ compared to 56% of Baby Boomers.
Let’s be real—taxes can feel like a foreign language. But not understanding them could mean missing out on big opportunities (hello, tax credits!) or making costly mistakes. So, let's clear up some of the most common tax misconceptions and get you in the know.
Common Tax Misunderstandings (And What You Should Know):
1. “If I Get a Tax Refund, That Means I’m Doing Something Right” 💰
Reality Check: A big refund means you've been overpaying throughout the year. Instead, adjust your withholdings to keep more of your money each paycheck.
What to Do: Use a withholding calculator to make sure you’re not loaning Uncle Sam your hard-earned cash.
2. “Only Rich People Need to Worry About Tax Planning” 🏦
Reality Check: Everyone—yes, YOU—can benefit from tax planning. From maximizing deductions to taking advantage of credits like the Earned Income Tax Credit (EITC), a little planning can save you serious money.
What to Do: Track your deductions (education expenses, charitable donations, and even side hustle costs!) throughout the year.
3. “Freelancers and Side Hustlers Don’t Need to Pay Taxes Until April” 🚨
Reality Check: If you're self-employed, taxes work differently. You should be paying quarterly estimated taxes to avoid penalties.
What to Do: Set aside at least 20-30% of your earnings for taxes and stay on top of those deadlines.
4. “Filing Taxes Is Only About Paying What I Owe” 📄
Reality Check: Filing taxes isn't just about what you owe—it's also about what you can claim! Many people miss out on credits and deductions because they don’t take the time to learn what they qualify for.
What to Do: Research available tax credits for your situation, whether it's education credits, child tax credits, or energy-efficient home upgrades.
5. “I Don’t Make Enough Money to File Taxes” 🚫
Reality Check: Even if you don’t make much, filing can still help you claim valuable credits, like the EITC or Child Tax Credit, which could put money back in your pocket.
What to Do: If you earned at least $12,950 (single filer) in 2024, you must file, and it’s worth doing even if you made less!
So, How Can You Get Better at Understanding Taxes?
Learning about taxes doesn’t have to be overwhelming. Here are a few easy ways to start:
Follow reliable financial pages (like The Simple Adult 😉) for bite-sized, actionable tips.
Use free online tools like the IRS website, TurboTax resources, or community tax workshops.
Grab our Tax Planning Made Simple Guide to help you stay prepared and informed year-round.
Take control of your taxes and start maximizing your money today!
Got a tax question you’re too afraid to ask? Hit reply and let me know—no judgment here!
Talk soon,
C
Founder of The Simple Adult 🩶
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