Tax season can be a stressful time of year for many people, especially if you’re worried about making mistakes on your tax return. The good news is that by being aware of some common tax mistakes, you can take steps to prevent them and ensure that your tax return is accurate and complete. In this blog post, we’ll cover some of the most common mistakes and provide tips on how to avoid them.
Failing to report all of your income
One of the most common mistakes is failing to report all of your income on your tax return. This can happen if you have multiple sources of income, such as a part-time job, freelance work, or investments, and forget to include them on your return. To avoid this mistake, make sure you gather all of your income statements, including W-2s, 1099s, and other important documents before you start preparing your return. Consult a tax expert if you’re unsure whether you need to declare a specific source of income.
Forgetting to claim deductions and credits
Another common mistake is failing to claim all of the deductions and credits you’re eligible for. Deductions and credits can help lower your tax bill and increase your refund, so it’s important to take advantage of them. Some common deductions and credits include the standard deduction, charitable contributions, student loan interest, and the Earned Income Tax Credit. To avoid missing out on these deductions and credits, consider using tax software or hiring an affordable tax planning service.
Filing with incorrect personal information
It’s important to double-check your personal information, such as your name, Social Security number, and address, before filing your tax return. Filing with incorrect personal information can delay your refund or even result in penalties if the information is found fraudulent. To avoid this mistake, take the time to review your personal information carefully and ensure that it matches your Social Security card and other official documents.
Filing late or not at all
Filing your tax return late or not at all can result in penalties and interest charges, even if you’re due a refund. Make sure to submit your tax return by the due date even if you are unable to pay the full amount due in order to prevent making this mistake. If you’re unable to file by the deadline, consider filing for an extension to avoid late-filing penalties.
Making math errors
Math errors can happen to anyone, but they can be costly if they result in an incorrect tax liability or refund amount. To avoid this blunder, double-check your math and use a calculator or reliable software to help ensure accuracy. Additionally, make sure you use the correct tax tables and formulas when calculating your tax liability or refund.
Failing to include supporting documents
If you’re claiming deductions or credits on your tax return, make sure you include supporting documents, such as receipts, invoices, and canceled checks. Failing to include these documents can result in your deductions and credits being disallowed, which can increase your tax liability. To prevent this error, keep careful records of your expenses throughout the year and file them with your tax return.
Choosing the wrong filing status
Choosing the wrong filing status can result in an incorrect tax liability or refund amount. To avoid this mistake, make sure you understand the different filing statuses, such as single, a married couple filing jointly, a married couple filing individually and the head of a family. If you’re unsure which filing status to use, consider hiring a professional.
Failing to report foreign income or assets
If you have foreign income or assets, you may be required to report them on your tax return. If you don’t report it may result in fines and interest charges. To prevent making this mistake, make sure you understand the reporting requirements for foreign income and assets and consult with an expert if you’re unsure how to report them correctly.
Claiming too many business expenses
If you’re self-employed or own a business, it’s important to be careful when claiming business expenses on your tax return. Claiming too many expenses or expenses that aren’t deductible can result in an audit or penalties. To avoid this blunder, keep detailed records of your business expenses.
Failing to file an amended return
After submitting your tax return, if you discover that you made a mistake or omitted something, you should file an updated return as soon as possible. There may be fines and interest charges if you don’t do it. To avoid this mistake, review your tax return carefully and file an amended return if necessary.
The Bottom line
In conclusion, by being aware of these common tax mistakes and taking steps to prevent them, you can help ensure that your tax return is accurate and complete. Remember to gather all of your income statements, claim all of the deductions and credits you’re eligible for, double-check your personal information, file on time, double-check your math, include supporting documents, choose the correct filing status, report foreign income and assets, be careful when claiming business expenses, and file an amended return if necessary. And if you’re ever unsure about how to file your taxes correctly, don’t hesitate to consult with a tax professional.