10 Mistakes to Avoid When Filing Your Taxes
Filling out tax forms can be a tedious task, but it is important to take time and avoid common mistakes for an accurate refund. These errors could result in costly penalties or completely hold up your refund.
Errors range from simple errors in arithmetic to misinterpreting the tax form instructions or selecting wrong filing status. Fortunately, most of these mistakes can be corrected before the deadline approaches.
Forgetting your Social Security Number
One of the most popularly made mistakes during tax returns is not including one’s social security number when she files her return or claims her refunds making the IRS have difficulties with processing your return or refund.
Make sure to enter everyone’s names exactly as they appear on their social security cards and verify that their social security card numbers are correct, and also check your bank account information if you use direct deposit.
Not Signing
Filling taxes can be a cumbersome process. The IRS requires you to fill out several forms and complete specific requirements so as to file an income tax return properly.
Mathematical errors are frequently responsible for incorrect filing of tax returns which will consequently reduce your refund amount or increase the money you owe significantly than necessary.
Check your math carefully, use tax software that checks for errors when preparing federal taxes. Failure to do this could lead to changes in ones’ taxes owed or an Internal Revenue audit; take caution!
Omitting Deductions
One of the main reasons why people make mistakes while filing taxes is not claiming all eligible deductions and credits ranging from student loan interest deductions to home office deductions – there might be many you haven’t taken advantage of yet!
In addition, mathematical errors are common while doing taxes. Any person can easily make mistakes in formulating addition sums, subtractions, multiplications and so on which may result into long term problems for taxpayers.
Omitting Adjusted Gross Income
Tax laws can be extremely complex and challenging to comprehend; however, any small glitch in the return may result in huge penalties.
Mistakes might range from addition mistakes to missing tax credits and deductions. Be sure to double check all your figures plus use software that performs calculations for you as well as include every source of income – wages from employment, bank account interest, stock dividends, rent received from property and bonuses are some examples of sources that should be addressed when accounting for income sources.
Not Claiming Earned Income Credit
Nobody likes being audited by the IRS but filing correctly is necessary or else a refund will take longer to process with possible penalties attached. Additionally, a single mistake can cost you severe fines or even face charges.
Ensure you claim each credit and deduction that applies to you including the Earned Income Credit. You can make sure your return has been filled out correctly using tax software – and don’t forget that filing early can save you money!
Omitting Business Income
Proper bookkeeping benefits small organizations by minimizing taxable revenue leading to higher deduction eligibility.
Double check your math whether you are an entrepreneur or employed worker so as not repeat common tax mistakes that could delay your case after being summoned by the IRS auditor who will impose fines on such errors. It makes it easier if one has a separate business checking account for recording income and expenses.
Omitting Business Deductions
As per the IRS, most errors made when filing tax returns are due to basic calculations. In order to minimize this risk, make sure that you double check all your sums and use tax preparation software for more accuracy.
Forgetting to Include Self-Employment Taxes
It is vital for any person who works for himself or herself to estimate and remit his or her federal and state income taxes. Failure to do it could lead to a penalty charge and a failure-to-file fee.
While filing taxes may seem complicated, it doesn’t have to be. By taking time and care in reviewing forms before submission, rookie mistakes can be avoided and save both stress and money.
Forgetting to Include Dependents
Dependents must meet all IRS requirements in relation to their earnings status as well as other factors like claiming head of household status while being dependent on someone else.
Names included on tax return must match those appearing on your Social Security card; even with software which checks numbers automatically, math mistakes can cost you lots of cash. You should also consider having someone else go through your return with you for an added layer of scrutiny and assurance.
Forgetting Wages
Even small errors made on your return could cause huge problems afterwards. Nevertheless, prevention is better than cure although it is possible in certain cases where one has filed wrongly.
Withholding Income from Employees’ Wages (Exception: Form 941 or 941-X)
Employers are required by law to deduct income and payroll taxes from what they pay their workers unless there are some issues that require Form 941: Employer’s Quarterly Federal Tax Return or 941-X: Corrected Wage and Tax Statement filing.
