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

http://wallstcheatsheet.com/personal-finance/the-8-most-common-mistakes-when-filing-annual-taxes.html/?a=viewall

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