It is time once again for that annual rite of passage for every taxpayer: getting the tax return and payment to the IRS on time.
If you have already filed and paid your taxes, you are to be congratulated. Hopefully, you have not made mistakes or, if you have, then your early filing may give you a cushion for correcting them before the tax deadline.
If you are waiting until the last minute, you may be setting yourself up for problems created by rushing or failing to file for a tax extension on time.
Here are ten common tax filing mistakes and how to avoid them.
You make a mistake in arithmetic or a transcription error when moving figures from one schedule or form to another.
You receive an immediate correction notice from the IRS because the math is the first thing the IRS checks. Errors can:
Either way, you have less money in the bank when it is all over.
You do not itemize when you should, or you make mistakes in entries such as:
You do not take deductions or credits when they are allowed, or you take them when you are ineligible for them.
You receive a correction notice. Your refund is reduced or you owe more taxes. If you do not correct the return and payment by the tax deadline, you may owe penalties and interest.
Names must match the Social Security identification number on record with the government. Issues typically occur with new spouses although it occurs for anyone who had a name change and did not notify the Social Security Administration.
Your return is not processed.
The option to have your refund directly deposited into multiple accounts increases your chances of entering routing and account number incorrectly.
You could lose your refund to someone else’s account, or it could be returned to the IRS. There is no procedure to replace lost electronically transferred funds.
If you have any non-W-2 earnings, you should obtain a Form:
The IRS receives this information automatically and checks it against your return.
Your refund could be artificially high, or your return may show you owe less in taxes than you actually do.
There are five options for filing status:
You may select only one.
Your refund is reduced, or you owe more taxes.
Some software applications will show you which ones you are eligible for and the difference in your refund or payment for each status.
Since the IRS stopped including Social Security numbers on tax packages due to privacy concerns, some taxpayers forget to fill it in. Your SSN is critical to many transactions including income statements, deductions, and credits.
Return processing may be slowed, or your return may not be processed at all.
Many types of donations, cash and other, could be valuable tax deductions but taxpayers may not claim them. Alternatively, charitable donations are miscalculated; non-cash donations can only be claimed at fair market value and must be in good or better condition.
You reduce your refund or owe more taxes. If you miscalculate and do not get it corrected before the tax deadline, you may be penalized and charged interest.
In a rush to mail or e-file, many taxpayers forget to sign their returns. Those filing under the status Married Filing Jointly may forget to have both spouses sign.
A return missing a signature is considered invalid, so it is like you never filed. You could face penalties for not filing or not paying.
Some taxpayers put things off until too late. Others do not believe they must file, either erroneously or intentionally.
You will be penalized for not filing and for non-payment. Your tax balance will incur interest charges. You could be charged with tax evasion.
Filing accurate income tax returns on time is essential to receiving a correct refund or calculating and paying the correct amount of taxes without overpaying.
Take the time to double-check your return and use a software application or have a tax professional prepare your return to minimize errors.
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Last updated: March 25, 2023
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