Tax season often sparks confusion, especially when it comes to what’s taxable and what isn’t. Below are some of the most common tax myths and the facts you need to know.

Myth #1: Retirement Money Is Always Tax-Free

Reality: Many retirees assume that withdrawing from a 401(k) or IRA won’t result in taxes. Unfortunately, any money withdrawn from a traditional 401(k) or traditional IRA is typically subject to income tax at your current rate. Be sure to account for taxes when planning those withdrawals.

Myth #2: The Government Won’t Find Out About a Big Gambling Win

Reality: Gambling winnings—from sweepstakes, casinos, bingo, keno, online sports betting, and more—are considered taxable income by both federal and most state governments. The IRS generally expects you to pay about 25% of these winnings. Trying to hide a big win will only lead to bigger problems down the road.

Myth #3: Government Benefits, Like Unemployment and Social Security, Aren’t Taxable

Reality: Unemployment benefits are taxed at your ordinary income tax rate at the federal level (and in some states). Social Security benefits are also potentially taxable, depending on your total income. That said, Supplemental Security Income (SSI) payments are not taxable. If you’re receiving benefits, make sure to check your tax obligations.

Myth #4: Working From Home Means You Can Write Off Office Expenses

Reality: Only a business operating from a home can claim the home office deduction. Traditional employees working remotely do not qualify for this deduction. Even if you operate a business from your home, you must meet specific requirements—such as using the space exclusively and regularly for business—to deduct home office expenses.