Depending on the circumstances, tax season might be a reasonably simple procedure or one that needs a significant investment of time and work. Here are some of the most frequent mistakes Americans make while filing taxes, as well as ways to prevent them.
Here are a few mistakes that you must avoid
Blundering on the basics
First, from income and refraining reported by business owners or other sources to your address as well as Social Security number, make sure the information on your tax return corresponds to the original documents with the IRS. Taxpayers frequently make mistakes with numbers. If you’re anticipating a refund, double-check that you’ve entered the Credit Union’s routing number and account number accurately. Whenever it comes to math, even a minor error can cause your figures to become skewed and subject you to IRS investigation.
Failing to report additional income
Having several sources of income complicates your tax situation. That is true whether you operate as a contractor or a worker or just collect income on your investments or savings accounts. Each employment or account must provide you with a Form 1099, which details your earnings. A copy is also sent to the IRS. Keep note of any new income, and make sure you account for it all on your tax return. Alternatively, you may be required to pay interest or incur a penalty on the unreported income.
Math errors
As per figures for the IRS’s 2018 fiscal year, almost 2.5 million arithmetic mistakes were identified on forms filed for the 2017 tax year. The mistakes might range from basic arithmetic, addition, multiplying, or division mistakes to picking the incorrect amount from a tax table or timetable.
The IRS program normally detects these errors and sends you a notification explaining the issue and informing you that your refund has altered (or that you owe more money). So, while correcting math mistakes is very straightforward, they might cause delays in the processing of your return.
Standard deduction
While itemizing takes more time and effort (as well as receipts and other documentation) than claiming the taxable income, you may be wasting money by doing so. It’s suggested you examine which option will result in a larger tax deduction. It’s worth noting that, according to the Tax Cuts and Jobs Act, the standard deduction nearly doubled for the 2018 tax year; itemizing is no longer likely to save you money. 1 Still, it’s never a bad idea to double-check the figures. The majority of tax software will figure out which way is the most advantageous for you.
Missing the tax deadline
You should be aware of the deadline for filing your taxes. If you miss the April deadline and owe the IRS money, fines and interest accrue daily. If you owe a tax refund, not filing on time may cause it to be delayed.
You may get additional time to submit your taxes by seeking an extension. However, keep in mind that all payments are due in April, so the more you wait to submit, the more you’ll owe.
Interesting Related Article: “How to Make Sure Your Taxes Are Paid on Time“