If you keep making common tax return errors, you will lose thousands of dollars of your hard-earned money. The sad part is that most mistakes while filing tax returns can be easily avoidable.
However, many of us get overwhelmed by the process and end up making silly errors that can cost us a lot of money.
Always review your online tax returns carefully before filing, otherwise, you may end up wasting a significant amount of time and resources correcting any mistakes later. Here are the top mistakes to be careful of when you are preparing for tax season.
- Filing Your Tax Return Too Early
This is one of the most common mistakes many people make because we get overly eager to get things done and check them off our list. However, it would help if you were careful not to file your taxes too early.
Although it is great not to miss any tax filing deadlines, you should also be cautious of filing anything prematurely. Always wait until you are certain that you have gotten all your tax reporting documents with you.
Otherwise, you risk making a tax filing mistake that can lead to numerous processing delays and cost you money. Instead of losing more of your tax dollars, look at your documents once more to ensure that you have everything before you file your taxes.
Even if you get busy with work and family commitments during the year, you should not get too frazzled during tax time. If you cannot get everything together, panic is unnecessary.
It always helps to work with a professional tax attorney to get the maximum return. Find out more about a tax attorney if you need support to avoid tax filing mistakes.
- Making Math Miscalculations
People tend to make mistakes, especially in arithmetic, or when they need to record a transcription error while moving figures around from one form to another.
This can significantly impact your tax returns, and you may receive an immediate correction notice from the IRS. Remember that math is one of the first things the IRS will check when you file your tax returns.
If you have any mathematical errors, you can end up losing some of your tax refunds. Or you may have a higher tax bill if the IRS is unsatisfied with the math.
Either way, you can end up with less money in your wallet when all this is over. So, working with an accountant and a tax software program is always worth avoiding calculation mistakes that will cost you a lot.
- Making Tax Deductions and Credits Errors
Do you struggle to itemize when you are supposed to? OR do you make mistakes in your entries regarding your estimated tax payments and taxable income?
If you do not take your credits and deductions where you are allowed to, you may become ineligible to take them later. This can impact your taxes, and you will get a correction notice from the IRS, especially if your refund is lowered and you owe higher taxes.
You can also incur interest charges and penalties if you do not correct these mistakes to show the right payment and return by the tax deadline. Work with a tax attorney or accountant who can help you carefully check your credits and deductions with the most up-to-date tax forms and tables.
- Getting Your Name Wrong
Are you guilty of spelling your name wrong? The worst place would be to do it on your tax return. All the names need to match the Social Security identification number you have on record with the government.
If you are a new spouse with a name change, you must notify the Social Security Administration (SSA) about your new name. Your tax return may not be processed if you do not report this in time.
If your Social Security card has a different name or spelling, you should always use the name from the card and then get it corrected with the SSA.
- Entering Wrong Account Numbers
Although we get the option to have our refund directly deposited into different accounts, this can lead to a lot of routing and account number errors.
If you put down the wrong account number, you risk losing your tax refund to someone else. Or it can also be sent back to the IRS. However, there is no process to replace any electronically transferred funds that have been lost.
So, you are responsible for always double-checking the routing and account numbers on your tax return as you type them in. Even if you have only one account number, you should look at every digit carefully to ensure you do not make any mistakes.
- Not Reporting Extra Income
Do you have any additional income that you are not reporting correctly? If you have any non-W-2 earnings, you must get a 1099-MISC for paid work performed or a 1099-INT/1099-DIV form if you need it for investment and bank accounts.
This will help the IRS get all the information to verify it against your tax return. Always keep track of any earnings that do not withhold taxes automatically. Then you should gather all your 1099 forms to prepare for the tax season.
- Not Including Your Social Security Number
Your Social Security number is critical for numerous transactions, credits, deductions, and income statements. Your tax return may be processed slower or not at all if you leave out your SSN.
Always submit all the required entries and check the Social Security numbers against your card, especially if you mention children or your spouse.
Avoid These Common Tax Return Errors
Now that you know the 7 most common tax return errors, it is time to work with a tax attorney to ensure that you never lose a lot of money to the IRS due to simple mistakes.
Always double-check all the information you provide to the IRS, or else you may face many delays and penalties. If you enjoyed reading this type of taxes guide, check out some of our other posts.