Taxes can be challenging, but the majority of errors that people make while filing their returns are straightforward. However, a minor mistake could cause your tax return or refund to be delayed for weeks or months, costing you money. The IRS claims that most errors can be prevented by filing electronically or by seeking assistance from enrolled agents, certified public accountants, or other experienced tax professionals.
Here are some of the common mistakes:
Not filing on time
According to the IRS, 20% of filers don’t submit their income tax forms until a week before the due date. Regrettably, waiting until the very last moment can compel some procrastinators to miss the deadline if they have any difficulties filling out their applications.
You still need to pay any taxes due by the original date, for example, April 15, 2020, for the tax year 2019, even though asking for an extension will offer you extra time.
The IRS will levy interest if you don’t make the payments by the deadline.
Missing or inaccurate information
Filling in the wrong Social Security number or leaving a box blank when submitting your taxes are two of the most frequent errors.
Importing last year’s return will make it easier for you to prevent those blunders because you won’t have to worry about making a mistake when manually entering your data.
If your AGI exceeds $50,000, add line 8 to line 32 and multiply by.356. These are two notoriously difficult tax form formulas.
Use tax preparation software that handles the math for you to save headaches. With TaxAct, all you need to do is respond to a few straightforward questions, and the program will automatically fill in the relevant numbers in the relevant boxes on your form.
Falling behind on the latest tax news
The tax law is not only intricate, but Congress makes minor adjustments to it each year. The tax system had its biggest revision in 30 years at the end of 2017. That much change is undoubtedly intimidating.
To avoid missing out on essential deductions and credits or attempting to claim a tax benefit that is no longer available, for essential updates, be sure to visit the IRS news page or subscribe to the TaxAct blog.
Not keeping a copy of your return
Tax experts recommend maintaining a copy of your tax return for at least three years.
The IRS is only permitted to audit you for gross underreporting of income for that amount of time.
Fortunately, you have seven years after filing to examine and print your TaxAct return without charge.
Inaccurate account numbers
You should always double-check your bank account and routing information if you want your refund direct deposited or if you’re making an electronic tax payment.
Entering inaccurate information will delay your refund or result in penalties and interest on late payments.
Missing a tax break
While the IRS isn’t famous for its kindness, there are a variety of tax credits and exemptions available, especially to families and students.
Make sure you take advantage of credits if you qualify because they can reduce your tax obligation by as much as $2,000 in some cases.
Make sure to consider all your options carefully before choosing the standard deduction. Particularly homeowners should itemize their largest deductions to determine whether they exceed the standard deduction.
Filing under the incorrect status
Depending on your filing status; single, married filing jointly, married filing separately, head of household, or qualified widow (er), the IRS uses different income tax rates and grants different standard deductions.
For instance, married couples filing jointly are eligible for twice as much of a standard deduction as single filers.
Also, take note that there are distinct requirements for married couples filing separately than for couples filing jointly.
For instance, both spouses must claim either the standard or itemized deductions if you file separately; only one of each can be claimed.