Filing taxes can be quite burdensome and taxing. Given the complexity involved in filing taxes, it is not surprising that many people make mistakes when submitting tax returns. These mistakes cost them hundreds of dollars in penalties.
Proper filing of the tax file not only saves money of the clients, but also time involved in identifying and correcting the mistakes. Our goal is to guide people in correctly filing the returns without making any mistakes. Below we have compiled a list of frequent mistakes that people commit when filing tax returns.
A common mistake people commit when filing taxes is entering figures incorrectly in the tax return file. The mistake occurs mostly due to errors in calculating the taxable income. Sometimes it also happens due when the wrong amount is transferred to the tax return file. These math mistakes result in immediate notification from the IRS. Making arithmetic mistakes can lower your tax refund or increase the amount you owe to IRS.
The best piece of advice to minimize these kinds of errors is to leave the work of filing taxes to the professional tax preparer. Getting the number right is important if you want to avoid the hassles involved in re-submitting the tax files. That is why you must find a tax professional to accurately file your taxes for you.
Another common mistake that people make when filing taxes is in figuring out deductions and exemptions that are allowed by the IRS. We have seen people come to us with a notification from the IRS about the wrong figures having been entered in the taxable of social security benefits, or earned income credit. People also make mistakes in calculating deductions that are allowed for senior people or disabled dependents. The mistakes usually occur due to the complexity of added forms or worksheets that must be filled before transferring the amount to the taxpayer Form 1040.
You must make sure that all the tax return files are properly signed and dated. Note that a tax return file is like a check; it will bounce back if you don't sign or enter the date. In case of a joint return, make sure that that both the partners sign the file.
IRS reports that one of the most common mistakes when filing tax returns is misspelling of names or wrong name entered in the file. When the name entered in the tax return doesn't match with the identification number recorded in the database of Social Security Administration (SSA), the IRS will instantly send a notification to the person.
This is a common mistake made by newly married couples. It's important that you notify the SSA about change in surname after getting married. This way, when you enter the new name in the tax return file, the IRS will not have any problem in validating the change in name. Be sure to notify Uncle Sam in case the marital bliss does not last and you revert back to the old name.
Your status, such as single, head of the household, married filing separately, or married filing jointly, will determine the forms that you need to fill out, deductions and refunds you can claim and the tax amount you need to pay to IRS. That's why it is important to ensure that you select the right filing status. Choosing the wrong status will result in a cascade of mistakes that will involve a lot of time in rectifying. Note that if you decide to file jointly with your spouse, you will be responsible for any deliberate errors made on your partner's returns. So, it's important to select the right filing status when submitting tax returns to the IRS.
If you earned additional income during a year, you will receive forms that detail the extra earnings. If you worked as a contractor, you will receive Form 1099-Misc. In case of earnings from investment accounts, you will get Form 1099-DIV or 1099-INT statements.
Copies of your earning records go to the IRS due to which it known exactly how much extra earnings you made during a year. If you commit an oversight while entering extra earnings when filing returns, the IRS will know about it and impose penalties for unreported income. That why it is essential to avoid making this mistake and ensure that you enter all the miscellaneous income when submitting tax returns.
If you file the returns electronically, you are required to enter a personal identification number (PIN). In case you do not remember the PIN, you have to enter the Adjusted Gross Income (AGI) that you originally entered when filing the returns. At this point, many people make the mistake of entering AGI amount from amended or corrected tax returns instead of the originally filed tax return.
Entering the account number incorrectly creates problems when claiming refunds from the IRS. It's important that you enter the correct bank account number when you select to receive the refund through direct deposit. Otherwise, the amount will be credited to a wrong person's account.
A common mistake identified by the IRS is entering wrong SSN number. It's important to make sure that you enter the SSN number on the tax return exactly as it is entered in the social security card.
Taking the help of professional tax preparers will save you time and costs in the long run. Find a tax preparer that has a good reputation among customers for accurately filing the taxes. The nominal fees paid for hiring the services of professional accountants to do the filing for you will be worth it in the end as you will not have to go through the hassles of rectifying mistakes.
Falisha Griffin