Last year, the IRS issued $324 billion in refunds last year. The April 15th deadline is fast approaching. If you haven’t filed your taxes yet, it’s time to get to work.
Before filing your taxes, you need to make sure you avoid certain mistakes. Read on to learn about the most common tax mistakes.
Don’t Forget All Income
Did you do any side jobs this year like freelance writing? If so, the company should have sent you a 1099-MISC form with information on your pay.
When you get a 1099, the IRS knows about this extra money. These forms are also sent to the tax agency, so don’t forget to report any of these earnings. You may even get a 1099 for unearned investment income.
If you do not report these earnings, you may have to pay penalties and interest. All your income is taxable, so you have to report it. Any 1099 form must go on your return somewhere.
Itemize or Not
If you do not meat the standard deduction, you must itemize your deductions. This can result in paying the IRS more. For example, if you donated $5,000 to a charity, but the standard deduction is $12,000, you will end up paying taxes on the $7,000 more in income (which is the difference between the standard deduction and your claimed deduction).
You should make sure you have documentation on your deductions. If you can itemize, it may save you a lot of money. Other things you can itemize include uninsured medical expenses, taxes, and interest paid on your home.
Missing Tax Credits
Tax deductions are helpful, but tax credits actually reduce your tax liability. Deductions come off your income.
The two most popular tax credits are the child tax and earned income credits. You need to make sure you qualify by using the IRS calculations. Try not to fudge these numbers to qualify.
You may have to complete extra forms to show you qualify for these credits. If you are unsure if you qualify for a tax credit, you may want to contact a professional to assist you with your tax service.
Double Check Bank Account Numbers
If you e-file and want your refund to be direct deposited, you will get your money back quicker. Be sure to double check your bank account and routing numbers to be sure it is accurate. If the information is incorrect, you will have some issues getting your refund.
Choose the Right Filing Status
There are five options for your filing status, and each one makes a significant different in your tax bill. These statuses include Married Filing Separately, Married Filed Jointly, Single, Head of the Household, and Qualifying Widow(er) with a Dependent Child.
If you have gone through a divorce, you may need to check with your ex-spouse or tax professional to make sure your new status makes sense for your tax return.
Check Your Math
Math errors are one of the most common return errors. The IRS found about 1.7 million math errors.
If you are doing a paper return, make sure you double check your numbers. Also, make sure you are using the most updated IRS tax tables.
Double check that you entered all your numbers correctly. If you are using software, it won’t give you the right result if you entered the numbers wrong.
Not Filing on Time
The IRS estimates 20 percent of Americans wait until a week before the deadline to file taxes. Waiting until the last minute could spell trouble. If you run into any problems filing, you may not make the deadline.
If you don’t make payments in time, the IRS will charge interest. You could always file for an extension, but make sure you do it correctly.
Double Check Social Security Numbers
Your taxpayer Social Security number is your identification number. The IRS does not put it on the package labels to protect your privacy.
Make sure you get your Social Security number is right because if it’s wrong, your taxes will not be able to be completed. Everything is tied back to your Social Security number even tax credits.
Don’t Use Paper
You are 41 times more likely to have an error if you use paper and not an electronic filing program. Do you really want to put that pressure on yourself? There are several software programs to choose from along with the IRS e-file.
These programs make your life simple by walking you through your return. They ask you simple questions to help you determine any credits or deductions. It will also tell you if you qualify for the standard deduction.
You don’t have to guess with these programs. Plus, they do the math for you which eliminates additional chances for errors.
If you don’t sign your tax return, the IRS will not accept it. Both spouses must sign the joint return whether it’s electronic or paper copy.
Remember to also double check your name. Your name most appear exactly as it does on your Social Security card.
Be sure your John Hancock is on every line needed before mailing or sending your form. You must also date your return.
Use the Right Tax Form
There are three tax forms. These include 1040, 1040A, and 1040EZ.
Choosing the right form for your tax situation is vital. For example, you can’t use the simple EZ version if you want to itemize deductions.
Staying Updated on Taxes
The tax code is complicated. Guess what? Congress changes it every year.
You want to make sure you know the latest updates, so you don’t miss any deductions. You also don’t want to claim a deduction that is no longer available. Using software or a tax professional will help you with this because they are always “in the know.”
Still Worried About Tax Mistakes?
No one wants to make tax mistakes. You should always triple check your tax return, but if you are still worried about mistakes, you may want to turn to the professionals that know the tax code best.
Contact Superior Financial today for expert tax advice. We can prepare your taxes for you to relieve any stress and get your refund as quick as possible.