Around tax time a lot of myths get thrown about online and offline. If you want to stay out of trouble with the IRS and get your tax situation done correctly take a look at some of the most common but nonetheless untrue tax myths out there:
- Money earned online is tax-free. Whether you earn money online or offline, all revenue is taxable by the IRS and must be reported to the IRS on your income tax filing. One of the biggest victims of this tax myth are entrepreneurs who finding more of their business online than before. Do yourself a favor and take the time to carefully document and report all revenue earned online and offline to the IRS at tax time.
- If you barter, you don’t have to pay taxes. While it is true that no money changes hands during a barter exchange, the value of the barter is taxable by the IRS for both sides. For example, if you bartered services valued at $100 with someone who was giving you services also worth $100, you both would need to pay taxes on the $100 worth of value you received.
- Under-age workers don’t have to pay taxes. All singles under age 65 with $9,350 in gross income in 2009 must file a return, as well as those 65 and older with income of $10,750 or more. Self-employed individuals with incomes of $400 or more regardless of their age must also file a tax return.