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Friday the 13th task: Dispelling some tax myths and superstitions

I admit it. I'm a bit superstitious. I throw spilled salt over my shoulder, knock on wood and avoid walking under ladders, although that last one is because I'm also incredibly klutzy.

I do not, however, suffer from paraskevidekatriaphobia or triskaidekaphobia. The first word is the fear of Friday the 13th, the second term is the fear of things or events associated with the number 13. Extra points to anyone who can pronounce either word!

Black cat quote from Groucho Marx Black cat, Groucho Marx quote poster courtesy Just Cats.

Joking aside, lots of people do dread 13, especially when their calendar shows it falling on a Friday.

Lots of people also dread taxes at any time of the year.

So on this scary-for-some day, I decided to dispel a few persistent tax superstitions and myths.

"I file at the last minute as audit protection."

The thinking here is that the Internal Revenue Service will be too swamped dealing with procrastinators' tax returns to look closely at every 1040.

Sorry, but that's bad logic. Each April 15 or so, the IRS is primarily interested in just getting those millions of returns into the system. The possibility that your return might be more closely examined comes later.

First a computer looks at your entries and sees if there are any numbers that look a bit off. This is the mysterious Discrimination Information Function, or DIF, that compares tax returns to a computer model to see if your entries are typical for your filing and income status.

If the computer flags your return, then a human IRS agent reviews it and determines whether further action, from a simple notice asking for more information to a full-fledged audit, is necessary.

It doesn't matter when you get your return into the system, the protocol is the same.

"A filing extension makes you an audit target."

This is a corollary to the last-minute filing fear. It's also wrong.

In fact, your chances of an audit may actually be lower when you file for a tax extension because you've given yourself enough time to avoid common tax-filing mistakes and properly fill out your Form 1040.

No errors means no audit.

"I don't e-file because it makes it easier
for the IRS to access my personal finances."

This same argument is used by folks who don't accept directly deposited refunds.

Wrong again. The IRS gets the same amount of info -- OK, except for your bank account if you request a paper refund check -- regardless of how you send it to the agency.

And if you owe taxes and decide against electronic payment such as electronic funds withdrawal or the Electronic Federal Tax Payment System (EFTPS) because of the same fear, remember that your personal check has your bank account and routing information on it. And that highly sensitive personal financial information is being sent through a very unsecure channel, the U.S. Postal Service.

What are your tax fears and superstitions? If you've been able to put the demons to rest, please leave a comment and tell us how.

And if you're still battling the tax terrors, share that, too, and maybe the ol' blog's readers and I can help.

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Comments

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Kay

thanks Bruce! want a copy editor job?!

Bruce Allen, EA

"expect for your bank account".
I believe you meant except.

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