Avoid These Common Income Tax Mistakes
Last updated: May 26, 2016
The income tax filing deadline is always quickly coming upon us. If you have been procrastinating, now is the time to get into action. Gather up your tax information forms, receipts, your personal and household info and the necessary tax forms and schedules that you will be needing. According to recommended tax advisors, here is a list of six of the most common mistakes to avoid.
1. Missing or Incorrect Social Security Numbers
The IRS reports that a very common error committed when filling out the 1040 form is forgetting to fill in the Social Security Numbers of the filer(s) and all dependents. Each year, thousands of returns arrive with incorrect Social Security Numbers, or none at all, according to the IRS.
One tax advisor points out that "Your income tax return will not be processed if the return has missing or incorrect SS numbers". Juxtapose some numbers and the rejection of many exemptions and deductions will occur. Any refunds you were expecting will be held up until the corrections are made, and if taxes are owed, you may end up owing late fees. Verifying each number against the Social Security Cards will eliminate the hassles that would arise.
2. Not Including Every Source of Income
Copies of all income documents must be included with your tax return. W-2 and numerous 1099 forms are the most common, but don’t forget to include taxable gambling winnings and other miscellaneous income. One advantage of using recommended tax services is that they are familiar with all of the forms and requirements.
The IRS receives copies of many of these income forms. If your return doesn’t include this data, the IRS will want to take another look at your tax return by sending you a letter requesting clarification or possibly setting up an audit.
3. Making Mathematical Errors
Even with all the new automated options to file, many tax returns are still filed manually. You can save money by filling the return out by hand, but the possibility of making a number of simple math errors enters the picture. All too often it is a simple arithmetic mistake that causes a big headache when the return is rejected by the IRS. One way to eliminate the chances of committing these simple errors is to use one of the many tax preparation software packages available.
These tax software packages can also reveal numerous deductions, exemptions and credits you may have missed. You have the legal right to take every action to reduce your tax burden that you are entitled. Don’t pay more than you have to. However, be sure that you are legally eligible for all those tax reductions. Your tax advisor can be most helpful with this part of the process, and it is perhaps the best reason for using a tax service. Each year millions of taxpayers claim rebates and credits that they legally are not entitled. The IRS may construe this to be tax evasion, and there is a good chance you will be audited. Hefty fines and possible jail time can be imposed if you are found guilty.
4. Neglecting to Date and Sign the Income Tax Return
Another surprisingly simple mistake that occurs all too often is to forget to sign and date the tax return. If your signature and date aren’t on your return, the IRS will consider it incomplete. You will be considered as not having filed, leaving you at risk of accruing interest and penalties.
Remember, if you are filing jointly, your spouse also has to sign the return.
5. Not Filing a Tax Return
Technically, you are not required to file by April 15th. However you must file for a six month extension by the fifteenth. Not doing so will cause the IRS to assess you with additional penalties and expenses. If you expect to owe tax, you must also include a payment for the estimated amount with the extension request.
6. Omitting Your Tax Payment
After putting in all the time and effort of preparing your tax return, the last thing you don’t want to do is forget to include your payment should you owe additional taxes. You will start accruing an interest penalty if your payment check is not included with your return.
A checklist of this recommended tax advice will come in very handy when it comes time to file you income tax return. And remember to review a final time to catch a small slipups that can cause so much trouble.