The 8 Most Common Mistakes When Filing Annual Taxes

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One of the worst mistakes a taxpayer can make is missing the April 15 filing deadline entirely. Another perhaps less obvious but very common error is failing to report additional income, such as contract or freelance work detailed on a 1099-MISC or earnings from a savings or investment account found on a 1099-INT or 1099 DIV. It’s not difficult to make a mistake of some sort during the filing process, especially as the tax code continues to grow in length and complexity. Chances are good that if you make a small error, the IRS won’t come knocking, but it will take longer to process your return and the IRS may even need to contact you in order to make the necessary corrections. This will almost certainly delay your refund. In some cases, such as with unreported earnings, you may owe penalties and interest.

Doing your own taxes gets more convoluted with each year, but according to the IRS, the most common filing errors are often the simplest. These mistakes are easy to make but also easy to correct. According to the IRS, people who do their taxes on paper are about 20 times more likely to make an error than e-filers. Whether you choose to file online or mail in your return, carefully read over all of your forms prior to filing to ensure that you haven’t made one of these eight frequent errors the IRS warns against. You can also check out the IRS’s more comprehensive checklist of preparation errors.

1. Wrong or missing Social Security numbers

An incorrect or missing Social Security number is a huge problem on tax forms. To avoid a headache for both you and the IRS, check the number for accuracy several times. If you are filing jointly, don’t forget to double-check your spouse’s social security number as well.

2. Names misspelled

Spelling your own name right may seems too obvious to mention, but misspelled names are actually incredibly common on tax forms. The name of each person included on your tax return should be spelled correctly. This means the name has to exactly match the spelling on that individual’s Social Security card.

3. Incorrect filing status

Selecting the wrong filing status is a fairly common error as well. Some taxpayers incorrectly select Head of Household instead of Single, and others make the mistake of checking more than one status. The “What is my filing status?” tool on the IRS website can help you determine the correct choice if you are not sure.

4. Math mistakes

Most tax forms require several calculations, and it’s not difficult to get bogged down by all the different figures and terminology. Slow down, use a calculator, and fill out the forms and worksheets more than once to check your work. One miscalculation at the very beginning can skew the results of the entire worksheet.

5. Errors figuring credits or deductions

Taxpayers frequently make mistakes figuring their Earned Income Tax Credit, Child and Dependent Care Credit, and/or standard deduction. For example, those who are 65 or older or blind should claim the higher standard deduction. Follow all instructions carefully, and reach out to the IRS for help if you need it.

6. Wrong bank account numbers

Many filers now choose to receive their annual refunds via direct deposit. In theory, this simplifies the process both for the filer and the IRS, but one incorrect numeral can cause major problems. Check your bank account number more than once to ensure you receive your deposit quickly and safely.

7. Forms not signed or dated

Once you have gotten through all the hard work of filling out the necessary tax forms, don’t make the mistake of submitting your return unsigned. The IRS considers an unsigned tax return totally invalid, much like an unsigned check. Remember that both spouses are required to sign and date a joint return.

8. Electronic filing PIN errors

When you file online, you are required to sign your return electronically using a PIN number. You can request a PIN from the IRS via the website. Alternatively, you can enter the Adjusted Gross Income (AGI) figure from your previous year’s tax return, but don’t use the AGI amount from an amended return or a return that the IRS corrected.

By Chloe Della Costa

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Saladworks Files for Bankruptcy

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Saladworks, LLC filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in Wilmington, Delaware earlier today. The move is expected to resolve the long-running dispute between founder and chairman John Scardapane and investor Vernon Hill, the Marlton-based banker. For years Scardapane and Hill have engaged in legal disputes over the control and recapitalization of the company, coming to a head with Hill pressing Scardapane to buy him out since 2013.

The bankruptcy filing, signed by Scardapane and Saladworks President Paul Steck, lists Hill, who founded the former Commerce Bank and Metro Bank Plc of England, as Saladworks’ lead unsecured creditor. Mr. Hill says he’s owed $8.8 million, a claim the company disputes. Additionally, Saladworks listed a debt of nearly $2.5 million, also disputed, owed to a company that Saladworks believes is associated with Mr. Hill.

The fresh-salad franchiser is looking for a buyer or new investors that will help extricate the company from litigation involving its owners. In the meantime, the Conshohocken, Pa.-based restaurant chain said that no Saladworks locations will close during the bankruptcy, with normal day-to-day operations expected to continue.

“Saladworks has determined that the best way to maximize value for its stakeholders is through a sale or recapitalization,” the company said in a release. “To ensure the most efficient process possible and to optimize the potential results for all parties, the company has determined to conduct its restructuring process under the supervision of the U.S. Bankruptcy Court.”

RadioShack Files for Bankruptcy

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Last Thursday, February 5, 2015, RadioShack filed for Chapter 11 Bankruptcy after 94 years in business. According to documents filed with the Court, RadioShack listed $1.2 billion in assets and $1.38 billion in liabilities, with between 50,000 and 100,000 creditors. The company, which has not turned a profit since 2011, employs about 27,500 people worldwide, according to its last annual report filed with the U.S. Securities and Exchange Commission. It is seeking court approval to keep paying employees, honor customer programs and keep operating as it restructures.

RadioShack was founded in 1921 by Theodore and Milton Deutschmann in a storefront in Boston. RadioShack quickly rose to glory with the mass adoption of the radio and the rise of electronics.  The company also became a top seller of the walkmen, CD Players, mini disk players and beepers. RadioShack also introduced one of the first mass-market personal computers The retailer eventually sold its first mobile phone in 1984 and eventually peddled over 73 million cellular phones over the last few decades. Ultimately, changing technology and consumer habits proved too much to overcome, which led to the bankruptcy filing on Thursday.

Although RadioShack has filed for bankruptcy, the company is poised to live on in a diminished form. Sprint and the hedge fund Standard General agreed to buy 1,500 to 2,400 of RadioShack’s 4,000 company-owned stores in the United States. Sprint is expected to run special “store within a store” departments in up to 1,750 of those stores, where customers will still be able to purchase RadioShack products, services and accessories. Sprint and Standard General will have to compete with potential rivals in a court-supervised auction. The remaining company-owned stores will then be closed.

Clothing Retailer Caché files for Bankruptcy

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Caché filed for Chapter 11 Bankruptcy protection earlier today, which gives the company protection from creditor lawsuits while it reorganizes its finances.

The New York company said Wednesday that it will keep running its business, but it also will continue to close stores and sell or renegotiate some of its leases. Caché sells dresses, sportswear and accessories and currently runs 218 stores. The retailer has secured up to $22 million in financing from Salus Capital Partners to keep operating during the bankruptcy proceeding. According to documents filed in court, Caché listed assets of $10 million-$50 million and liabilities of $50 million-$100 million. The mall-based retailer has not reported a profit in the past nine quarters.

“We believe that this action provides (Caché) the greatest opportunity to secure a strategic partner while maximizing recovery to our stakeholders,” Chairman and CEO Jay Margolis said in a statement from the company. Caché blamed the depressed brick-and-mortar retail market, the growth of online shopping and rapidly changing consumer tastes for its Chapter 11 filing.

Caché now joins a list of retailers that have sought Chapter 11 protection over the past couple months that includes The Wet Seal Inc., Delia’s Inc. and Deb Stores.