Whether you choose to use an online tax preparation app or file your own taxes offline, make sure you avoid these common mistakes when filing an income tax return.
Blundering on the basics
Make sure the information included on your tax return matches the information the IRS has on file — from the income and withholding reported by employers or other sources to your address and Social Security number. Numbers also rank among the common errors taxpayers make. Ensure that you enter the Credit Union’s routing number correctly as well as your account number, if you’re expecting refund. When it comes to the math, a small miscalculation can throw off your numbers and possibly trigger IRS scrutiny.
Name changes and misspellings
If you use a name other than the one the IRS has on file for your Social Security number — even a misspelling — it can spell trouble when you file.
Omitting extra income
Keep track of all your income sources and confirm early in the year you have the proper paperwork. If necessary, reach out to request a copy of the needed documents. If you received income from any sources that cannot provide appropriate documentation, complete and submit an IRS Form 1099-MISC.
Missing out on credits and deductions
Do some research or ask a professional to see if you’re better served by the standard deduction or by itemizing deductions such as allowable medical expenses, mortgage interest or charitable donations. Look for allowable adjustments to income under COVID-19 relief legislation too.
If you do itemize, gather receipts for all the expenses you plan to deduct. Also ensure those expenses meet IRS requirements.
Not using the most recent tax laws
There have been major changes to the tax code in recent years. The standard deduction has increased as has the maximum earned income tax credit (EITC) for families with three or more children. The maximum income limit for the EITC for married, filing jointly, with three or more children has also increased.
Flubbing the final steps
Tax filers are vulnerable to tiny errors, so it’s worth going through your entire return line by line to make sure you’ve done it right.
If you’re filing a paper form, get a receipt to confirm your mailing. Even better, file your taxes online for a faster and more secure submission. Not only will you get any potential refund faster, but e-filing can reduce the chances of making a mistake. The software can check for missed deductions or credits.
If you owe money, you can set an automatic payment date anytime on or before the tax year’s due date. Like filing a paper form, you’ll still need to sign your return when you e-file. To do so, you’ll use a Self-Selected PIN to confirm submission instead of your signature.
The advice provided is for informational purposes only. Contact a tax advisor for additional guidance.