Income Tax Terms are Often Misunderstood
Income taxes and the underlying tax code in the United States are certainly complicated, and many taxpayers really don’t know much about the law or the process of collecting and paying income taxes. For the most part, they don’t have to; their tax preparation is handled by software or perhaps a professional tax preparer, and all the taxpayers have to do is provide the appropriate information in order to file their annual tax return. For most people, the only thing that really matters is the amount of the income tax refund that’s coming back to them.
That’s fine, as far as it goes, but there are some things that do require attention from taxpayers from time to time, and due to the complexities of the tax code, a lot of people misunderstand relatively common terminology related to income taxes. Most of the time, this doesn’t matter, but as with most subjects, the better informed you are, the less likely you are to get into trouble. When it comes to income taxes, you’ll find that the better informed you are, the greater the likelihood that you’ll be able to find a way to save money and that means a larger refund. That’s always a good thing.
Below are a few of the most commonly misunderstood income tax terms. Continue reading