Debunking Common Misconceptions About Tax Filing

1 June 2025

Tax season can be a stressful time of year. Between collecting receipts, navigating deductions, and meeting deadlines, it’s easy to feel overwhelmed. But one thing that makes tax filing even more confusing? The countless myths and misconceptions floating around.

A lot of people believe certain tax "facts" that simply aren’t true. And falling for these myths can lead to costly mistakes, missed deadlines, or even paying more than you owe.

So, let’s set the record straight! In this article, we’ll debunk some of the most common misconceptions about tax filing to help you approach tax season with confidence.

Myth #1: Filing Taxes Is Only for People Who Owe Money

Many believe that if they don’t owe the IRS anything, they don’t need to file. That’s a big misconception!

Even if you earned below the taxable income threshold, filing a tax return can be beneficial. Why? Because you may still qualify for tax credits and refunds that put money back in your pocket.

For instance, if an employer withheld tax from your paycheck, you could be eligible for a refund. Additionally, refundable credits—like the Earned Income Tax Credit (EITC)—can provide a tax refund even if you didn’t pay any income tax.

So, don't skip filing just because you think you owe nothing. You might be leaving money on the table!

Myth #2: Tax Filing Is Only for People with a Full-Time Job

Think taxes only apply to full-time employees? Think again!

Freelancers, gig workers, and independent contractors all have tax obligations. Unlike traditional employees who have taxes automatically withheld from their paychecks, self-employed individuals must report and pay their taxes manually.

If you earn income from side gigs like Uber, Etsy, or freelance writing, the IRS expects you to report that income. Ignoring this can lead to penalties, interest, or even bigger tax bills down the road.

Bottom line? If you make any taxable income, no matter how small, you should check if you're required to file.

Myth #3: You Can't File Your Taxes After the Deadline

Missed the April deadline? Many assume that if they didn’t file on time, they’re out of luck. Not true!

While filing late isn’t ideal, you can still file your taxes after the deadline. In fact, if the IRS owes you a refund, there are no penalties for filing late. You typically have up to three years to claim a refund.

However, if you owe taxes and missed the deadline, penalties and interest may start accumulating. That’s why it’s always a good idea to file as soon as possible—even if you can’t pay the full amount right away.

Pro tip: If you’re struggling to pay what you owe, the IRS offers payment plans to help spread out the cost.

Myth #4: Students Don't Need to File Taxes

Think being a student means you’re off the hook for taxes? Not exactly.

If a student has a job and earns more than the IRS filing threshold, they need to file a return just like everyone else. Even if they make less, filing could be worth it to claim education-related tax credits like the American Opportunity Credit or Lifetime Learning Credit.

Additionally, some students receive scholarships or grants that may be taxable. If any portion of that money was used for non-qualified expenses (like room and board), it may be considered taxable income.

The short version? Students should always check if they need to file—it might actually work in their favor!

Myth #5: Getting a Tax Refund Means You Did Something Right

A big refund feels great, but does it actually mean you "won" tax season? Not necessarily.

Your tax refund is essentially the IRS giving you back your own money—money that was overpaid throughout the year. While getting a hefty refund may seem like a bonus, it actually means you gave the government an interest-free loan.

Instead of waiting for a refund, you could adjust your withholdings and have that extra money added to your paycheck throughout the year. More cash in your pocket now means you can invest, save, or pay off debt sooner.

So while a refund can be nice, it's not necessarily a sign of smart tax planning.

Myth #6: You’re More Likely to Get Audited If You File Electronically

Some taxpayers worry that e-filing increases their chances of an IRS audit. But in reality, the opposite is true.

Filing electronically actually reduces the risk of errors, which means less chance of attracting IRS attention. The IRS even encourages e-filing because it’s faster, more secure, and results in fewer mistakes compared to paper filing.

Audits typically happen when there are red flags—like unreported income, excessive deductions, or large charitable donations that don’t match your earnings. But simply e-filing your tax return doesn’t put you on an automatic audit list.

In fact, paper returns are more prone to mistakes—and mistakes are what often trigger IRS scrutiny.

So, don’t fear e-filing. If anything, it makes tax season less painful and more efficient!

Myth #7: You Don't Need to Report Cash or Side Income

Cash payments are "off the books," right? Nope!

Some believe that income from side gigs, tips, or cash jobs doesn’t need to be reported. But whether you earn in cash, PayPal, Venmo, or direct deposit, it’s still taxable income.

The IRS requires taxpayers to report all earned income, whether or not a 1099 or W-2 form was issued. Failing to report side income could lead to penalties, interest, or even tax fraud charges if caught.

A good rule of thumb? If you earned it, report it. It’s better to be safe than deal with the IRS later.

Myth #8: Tax Software Guarantees a Perfect Return

Using tax software can make filing easier, but does it guarantee perfection? Not always!

While tax software helps guide you through the process, it relies on the information you enter. If you input incorrect details or miss a deduction, the software won’t necessarily catch it.

Additionally, complex tax situations (like self-employment, rental properties, or large investments) may require a level of expertise that software just can’t provide. In cases like these, a professional tax preparer might be the better choice.

Think of tax software like GPS—it's a helpful tool, but if you input the wrong address, you won’t end up where you need to be!

Myth #9: The IRS Will Call or Email You About Tax Issues

Ever received a phone call or email claiming to be the IRS? Be careful—it's likely a scam.

The IRS never initiates contact via phone, email, social media, or text messages regarding tax issues. If they need to reach you, they’ll do it by mail first.

Scammers often use fear tactics, claiming you owe taxes and demanding immediate payment. But remember—the IRS will never ask for payment via gift cards, cryptocurrency, or wire transfers.

If you receive a suspicious call, hang up and verify directly with the IRS before taking any action.

Final Thoughts

Tax filing is complicated enough without myths making things harder. Believing misinformation can lead to mistakes, missed refunds, or even audit risks!

By understanding the facts, you can file confidently, maximize your savings, and avoid unnecessary headaches. If you're ever unsure about a tax situation, don't hesitate to seek professional advice—it’s always better to do things right the first time.

So, as tax season approaches, keep these myths in mind and tackle your taxes with clarity and confidence. You’ve got this!