20 Common Tax Filing Mistakes and How to Avoid Them
When dealing with a tax code of over 4 million words, mistakes are bound to happen. Interestingly most of the errors that taxpayers make when filing their returns are relatively straightforward and avoidable. Top on the list are these 20 mistakes.
- Not Filing On Time
Statics by the IRS shows that up to 20% of taxpayers will wait until the last week of the filing deadline to file their tax returns. Some of these people fail to complete their taxes by the deadline and consequently have to pay an extra interest to the IRS. Though you can file for an extension, you are better off paying your taxes in good time well before the deadline.
- Missing Social Security Numbers
Entering wrong social security numbers or failing to register you SSN is a common albeit incredibly stupid mistake that taxpayers make according to irs.gov . Always enter the SSNs exactly as they appear on your card.
- Wrong Names
The spelling of your name is an important part of filing your tax returns. Ensure that all the names on tax return are exactly as they are on social Security cards
- Errors With Filing Status
Use the wrong filing status when filing tax returns is relatively common. This can be avoided by using reliable tax software or the IRS.gov’s interactive tax assistant.
- Transcription Errors
When filing your return, sometimes you may enter details incorrectly. This happens unconsciously and may delay the processing of your returns by the IRS. Always go through your forms after filing to ensure that no errors and typos were made
- Mistakes With The Math
Addition and subtraction can at times be a problem especially when dealing with complex returns. Tax preparation software is an excellent way of avoiding such mistakes since they do all the calculations for you.
- Using The Wrong Filing Form
This is a mistake that influences the speed with which your returns will be processed by the IRS. Additionally using the wrong form may lead to loss of money. It is thus important to find out exactly which form you should be using well before you begin filing your returns.
- Errors In Working Out Deductions And Credits
It is not uncommon to have a problem figuring your earned income tax credit, standard deductions, as well as Child and Dependent Care Credit. This can be resolved through e-filing or carefully following the filing instructions
- Bank Account Number Errors
It is essential to have the account number for your bank correct so that your tax returns will eventually get to you.
- Not Claiming Your Entire Income
The IRS recommends that you claim all your revenue for the year including earnings from side jobs, prizes, and awards as well as gambling. Failing to do this may constitute a victimless crime when the IRS audits you.
- Mailing Your Returns
You may be old-school but sending your return through mail is a mistake you do not want to make. Besides the fact that it gets your returns slower than electronic filing, it is also prone to many errors and mishaps that jeopardize your getting of refunds.
- Not Signing Your Forms
Sending an unsigned tax return is almost as good as not filing at all. It renders your wok null and void. Therefore, ensure that you have signed all the required sections
- Lack Of Appropriate Dating
This too is a mistake that makes your tax return invalid. Therefore, ensure that your tax return is correctly dated.
- Pin Errors During Electronic Filling
Electronic filing is only possible with then correct Personal Identification Number. Therefore, ensure that you have the right PIN.
- Paying For Tax Preparation
There is almost no need to hire someone to do your taxes. Make use of free service offered by some online companies, volunteer income tax assistance as well as the TCE program by the IRS
- Not Keeping Abreast With The Latest Tax News
As mentioned the tax code is complicated, and it keeps changes each year. The IRS news page posts the most recent important updates and, therefore, every taxpayer needs to consult it every now and then.
- Not Retaining A Copy Of Your Return
taxact.com advises that you ensure that you have a copy of your returns at least for3 years; the period within which you can be legally audited by the IRS.
- Not Filling
Even for individuals who can’t pay their tax bill in full, the IRS can work out an installment plan for then. The interest rates are low, and this is way better than not filing altogether.
- Missing And Incorrect Information
Leaving blanks and entering incorrect data is a mistake that can hinder the processing of your returns by the IRS. You can always import last year’s return if you are not sure of what to do.
- Automatically Taking Standard Deduction
Itemizing may be time consuming, but it is worth the trouble. It saves you money that could have otherwise been lost if standard deductions were chosen. You can alternatively check what other alternatives exist that could give you a greater write-off.
Now that you are aware, avoid making these mistakes as you file your returns since though simple, these errors may end up costing you money and prevent you from enjoying tax breaks.