INDIANAPOLIS – Many tax myths circulate each year about filing individual income taxes leading to tax problems down the road. To avoid processing delays and future issues, the Indiana Department of Revenue (DOR) is busting five common myths about individual income taxes.
Myth 1: Filing taxes is voluntary.
Truth: Whether taxpayers lived in or outside of Indiana during each filing year, if they have received income from any Indiana business or individual, they must file an individual tax return. A general rule of thumb is to file Indiana state taxes if the individual’s income was $1,000 or more for the tax year. When in doubt, file.
Myth 2: Pets can be claimed as dependents (yes, some people try to claim them).
Truth: While pets certainly depend on people for their care, it doesn’t mean they qualify as a dependent. In fact, only human dependents can be claimed. To find out which individuals are qualified dependents, check out the IT-40 booklet on DOR’s website, dor.in.gov.
Myth 3: Tips don’t count as income.
Truth: Plain and simple, all income counts as income. Whether income is in the form of a tip or an hourly wage, paid via cash, check, or direct deposit, it must be included as income when filing a tax return.
Myth 4: Illegal activity is not taxable.
Truth: All income counts as income, even if it was earned through illegal activities.
Myth 5: If an extension is filed, payment isn’t due until the extension date.
Truth: An extension only extends the time to file, not the time to pay. All payments for taxes owed for the 2019 individual tax year are due on July 15, 2020. However, if an individual pays 90% of the taxes owed by that date, they can avoid both penalties and interest. If they wait to pay until the Nov. 16, 2020 extension deadline, both penalties and interest will be added to the total taxes due.
If Hoosiers have any questions regarding their individual tax return, DOR’s Customer Service team is here to help. Simply call 317-232-2240, Monday through Friday, 8 a.m. to 4:30 p.m., EST or email DOR at IndividualTaxAssistance@dor.in.gov.