Credit Sesame examines tax fiction and explains tax facts.
Few of us want to pay income taxes. This may explain why all kinds of myths exist about ways to lower your taxes or get out of paying them entirely.
Real facts can get left on the sidelines, for example, by an unscrupulous tax preparer who tries to make money by telling people they don’t have to pay taxes or are exempt from some of them. Or you may read online that some people believe federal income tax laws are unconstitutional.
We separate the facts from the fiction for you. Here are some fictional tax arguments and the facts that refute them:
FALSE Filing taxes is voluntary
For most people, filing tax return Form 1040 is not voluntary. The specific requirements for filing a tax return depend on several factors, including your income, filing status, and age. If your income exceeds a certain amount, you must file a tax return, even if you do not owe any taxes. For tax year 2022, if you are a single filer under 65 and your gross income is at least $12,950, or if you are married filing jointly and your gross income is at least $25,900, you are required to file a tax return.
You don’t have to file taxes if you meet certain requirements, but you may want to anyway if you’re entitled to a tax refund.
FALSE The Constitution doesn’t require tax payments
The IRS has probably heard every argument imaginable about why income taxes don’t have to be paid. On one of its many website pages, the IRS debunks frivolous tax arguments in several false contentions that Constitutional Amendments don’t require tax payments.
Frivolous tax arguments include claims of protections against:
- Religious or moral grounds
- Search and seizure
- Self-incrimination
- Taking property without due process of law
Regarding the First Amendment, some individuals or groups cite its protections and claim taxpayers may refuse to pay federal income taxes based on their religious or moral beliefs or on an objection to using taxes to fund certain government programs. The IRS says the First Amendment doesn’t provide a right to refuse to pay on such grounds. It cites at least eight federal court cases upholding the law.
Another Constitutional Amendment claim is that tax laws are unconstitutional because the Sixteenth Amendment wasn’t properly ratified and that it doesn’t authorize non-apportioned federal income tax on U.S. citizens. The Sixteenth Amendment gives Congress the power to lay and collect taxes on income, and has been found by the Supreme Court to be legally ratified, the IRS says.
FALSE The IRS isn’t an agency of the United States
Some argue that the IRS isn’t an agency of the United States, but is a private corporation because it wasn’t created by an act of Congress. Therefore, the IRS doesn’t have the authority to enforce the tax code.
Constitutional and statutory authority establishes that the IRS is an agency of the United States, and the Supreme Court has stated “the Internal Revenue Service is organized to carry out the broad responsibilities of the Secretary of the Treasury”.
FALSE Social Security taxes paid over a lifetime can be refunded
Proponents of this false claim encourage people to file claims for a refund of the Social Security taxes paid during their lifetime on the basis that they waive all rights to their Social Security benefits. Or they encourage taxpayers to claim a charitable contribution for their “gift” of these benefits or of the Social Security taxes to the government.
No law exists that allows for a refund of Social Security taxes paid on those assertions. No such charitable contribution deduction exists either.
FALSE Tax credit can be claimed for slavery
The false claim is that African Americans can claim a “Black Tax Credit” on their tax returns as reparations for slavery and other oppressive treatment suffered by African Americans. A similar argument has been made about Native Americans.
There is no provision in the Internal Revenue Code allowing such credits, and no legislative body has enacted such laws. This abusive tax shelter is illegal and violators could be prosecuted under federal tax laws.
FALSE You must not file a tax return if you have low earnings
While you may not be required to file a tax return if your income is below the threshold, there are a few reasons why you might want to file a tax return even if you don’t have to. You might be owed a refund and only get a tax refund by filing a tax return.
Your income, filing status, age and whether you fall under a special circumstance are the factors that determine if you need to file your taxes.
Income levels are a big indicator. If you’re single and under age 65, you don’t have to legally file a tax return if you earned less than $12,950 during the 2022 tax year. For married couples filing jointly who are under 65, their combined income must be less than $25,900 to avoid filing.
But even if you earn less than the minimum amount and aren’t required to file a tax return, you may want to file one if you are due a refund. Federal taxes are taken out of your paychecks and you may be refunded if you don’t meet the income requirements. Or you may qualify for some tax refunds if you have children.
FALSE Pets can be claimed as dependents
Unless your pet is a business expense like a guard dog, or a medical expense as a service animal, the IRS doesn’t allow pets to be claimed as dependents on your taxes.
FALSE Money made online is tax free
All income, whether earned online or offline, is generally taxable, and failing to report income can result in penalties and legal action. It is important for individuals earning money online to understand their tax obligations and file accurate and complete tax returns to avoid consequences.
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Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.
