Tax Return Mistakes that Cost You Money
Knowing how to file taxes can seem complicated. That’s because tax laws are changed often, and keeping up is hard. This can lead to filers making mistakes on their tax returns. Interestingly, common tax return mistakes are often surprisingly simple. When filing electronically, however, tax mistakes are easier to avoid.
When you rely on a reputable tax professional they will use certified tax software. And they will ensure that the math and all possible deductions and credits are made appropriately to ensure you get the largest refund possible. Or, if you end up owing, they’ll ensure the amount owed is the minimum amount. flags common errors and prompts taxpayers for missing information.
9 Tax Return Mistakes to Avoid
1- Missing or Inaccurate Information – When filing a return, it’s important to properly document the information contained within the forms. One mistake to watch out for is ensuring that each Social Security Number is exact and that you are giving the SSN for each person listed including individual, spouse, children, and other dependents.
2- The Wrong Filing Status – Your filing status is determined based on whether or not you are married. If single, you file as an individual. If married, you are to file as married and either married filing separately, or married filing jointly. For most married couples, married filing jointly is the status used. For those who are separated, or recently divorced the status may have changed. You can use the IRS.Gov Filing Status feature to help determine the right status for your situation.
3- Misspelling Names – Just as it’s vital to use the correct social security number, ensuring that each name listed on the tax return should match the person’s Social Security card, and other tax returns already on file with the IRS.
4- Wage Discrepancies – Any income you earn including salary, freelance wages, bank interest, royalties, dividends from stocks, or any other income must be accurately reported on your return. Because businesses are required to report their payments to the IRS, they are able to track the income they’ve received. Therefore the income you report on your return should accurately reflect all of the income you, and your spouse if filing married/jointly, have received.
5- Making Mistakes with Math – The most common error is with math. Whether entering the wrong number by mistake or calculating addition or subtractions wrong, it is always important to double-check both the numbers and the calculations to ensure all the numbers are correct. Plus, you want to make sure you are placing the right credits and deductions into the proper locations on the forms. Your best option to ensure accuracy is using a tax professional, whose software does the work for you.
6- Mistakes with Credits or Deductions – From standard deductions to itemized deductions and tax credits it’s important to know what you are qualified to claim when you are filing your return. These claims are governed by federal and state laws. So you can’t just decide for yourself what you want to do, and your claims must be backed by documentation proving you are eligible for each deduction or credit. You can use the IRS Standard Deduction Tool to determine what your standard deduction should be. Credits are
7- Entering the Wrong Bank Account Numbers – The quickest way to get your refund is by direct deposit to your bank account. But, you need to ensure you are entering your full routing and account numbers accurately to get the deposit to the right account.
8- Filing TOO Early – While it can be tempting to file your return very early, it’s important to not file before you have all the necessary documentation. For most people that includes a W-2 from each employer. It could also include 1099s for other income, a 1098-T for education expenses, and this year the Letter 6419 for the Advanced Child Credit if you received any payments. While filing early is best for ensuring you have time to file before the deadline, and getting the most rapid refund possible, it’s more important to make sure you have all relevant documentation so your processing goes smoothly.
9- Forgetting to Sign Your Return – Did you know that an unsigned tax return isn’t valid? For anyone filing jointly, the form must be signed by both spouses with a few exceptions, one being a member of the armed forces, another being someone who had durable power of attorney to act on behalf of a disabled person. When filing jointly, you can apply a digital signature, which serves as a legally binding signature on all legal documents.
Of course, here at Cowdery Tax we’re ready to help to ensure that you are able to file the most accurate return possible. Call now to book your appointment, or send us an email using the form below and we will return your message as soon as possible.
