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The Wisdom Blog

News and Tips from Wisdom CPAs

Common Tax Myths

Money you inherit is taxable to you.
● While this is a very complicated area of taxation, in most cases the person receiving the inheritance is not liable for tax associated with the gift.

You cannot claim your parents as dependents if they live in the nursing home.
● If you provide over 50% of support for a relative, you may be able to claim them as your dependent even if they do not live with you.

If you owe income tax on your return, don’t file the return until you have the money to pay in full.
● The amount due on your tax return is not due until April 17th, 2017, regardless of how early you file the return. The IRS also offers an installment agreement that allows you to pay your tax liability over a period of up to six years. The installment agreement is fairly simple and easy to prepare.

If you extend your tax return, you increase your chances of being selected for an audit.
● There is no proven connection between extending your tax return and being selected for an audit. There is also no proven connection between filing early and being selected for an audit.

You can write off your dog.
● You can write off pet related expenses for a guard dog that protects your business or a service dog for medical reasons. Other than those two scenarios, the IRS will not allow you to deduct expenses related to Fido.

Jake Wisdom