Every year we get approached by individuals and business owners who opted to file their own taxes – and ended up making a mistake during the process. The good news is, it happens all the time! The bad news is, that mistakes in your tax filings can lead to penalties in the form of fines and headaches down the line.
We’ve culminated 5 of the top tax filing mistakes that we’ve seen over the years in an effort to help you avoid them!
1. Not Filing at All
The biggest mistake you can make when it comes to your taxes is not filing them at all. This will result in a failure-to-file penalty, which is usually much higher than the failure-to-pay penalty. So even if you think you can’t afford to pay your taxes, it’s still better to file and work out a payment plan with the IRS.
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2. Incorrect Social Security Numbers
Be sure to double-check that all the social security numbers on your tax return are correct. This includes your own social security number, as well as those of your spouse and dependents. An incorrect social security number is one of the most common mistakes made on tax returns, and it can cause a lot of problems down the road.
3. Math Errors
Another common mistake is simple math errors. Be sure to double-check all the numbers on your return before you file, or you may end up having to amend your return later.
Check that the numbers on the first two pages of your tax return add up. Using a tax accountant or software streamlines the process and eliminates the need to do the calculations yourself. The majority of people prefer this.
4. Filing Status Mistakes
Choosing the wrong filing status is another mistake people often make on their taxes. ‘Single, married filing jointly, married filing separately, head of the home, and qualifying widow(er) with a dependent child’ are the five statuses available on the form. It’s critical that you pick the one that’s right for you.
5. Claiming Incorrect Deductions
When it comes to deductions, there’s a fine line between taking what you’re entitled to and taking too much. Be sure to familiarize yourself with the rules for claiming deductions, and don’t try to deduct items that you know aren’t allowed. Taking too many deductions can result in an audit, so it’s not worth the risk.
6. Not Signing and Dating the Return
This may seem like a no-brainer, but we’ve seen it happen more than once! Be sure to sign and date your return before you mail it off, or the IRS will not process it.
Now that you know the most common mistakes, below are three tips to ensure these don’t happen when you go to file:
Take your time: Tax season is hectic, but it’s important to take your time when filing your return. This will help ensure that you don’t make any mistakes.
Get help if you need it: If you’re not sure about something on your return, don’t hesitate to get help from a tax professional. It’s better to be safe than sorry.
Check your work: Be sure to review your return before you file it. This will help you catch any mistakes so you can fix them before it’s too late.
These are just a handful of the most common mistakes people make when filing their tax returns. While using a popular filing software may look like the cheaper option at first, common errors and undiscovered deductions often end up making the experience much more expensive than partnering with an accounting firm.
Contrary to popular belief, tax season doesn’t have to be stressful – just be sure to avoid these simple errors and you’ll be on your way to maximum savings!