Tax filing is a task that has many layers in it. And due to that, it is easy that one or a few aspects of the process goes under your nose. These small mistakes can result into a huge headache later on, as it may end up costing you much more. It may be in the form of extra tax or refunds, so it is okay to recheck all the way through before filing. Here are the 10 common mistakes you may make while tax filing.
1. Math Mistakes
One of the most common mistakes people make is the arithmetic of their calculations. The figures of the transferring schedule from one period to another is the most gullible area for that mistake. Use tax software to do that work for you to avoid the calculative mistakes. Just make sure that the initial amount you put in is correct.
2. Computation errors
This error is a cousin of the math mistakes. What you need to be careful about it evaluating the taxes based on all your sources of incomes, and knowing what is taxable and what isn’t. The most careful you need to be is about the credits and special deductions. Make sure to carefully assess these before filing the tax form.
3. Spelling mistakes in names
The numbers are important, but the names are as important too. Many a times, the names don’t match the identification number by the SSA. This usually happens in the newly married households with the wives who changed their last names.
4. Direct deposit
Refunds are what most people aim for while filing for taxes. Many people have multiple accounts where their money is transferred to save that money. But the more number of accounts you file, the more chances you have of entering their details incorrectly, which may end up in you not receiving your refunds.
5. Additional Income
Many people have side jobs, whose salary is usually unreported. But the IRS knows about it because they can see how much extra money is transferred into your banking account. You may think it goes unnoticed, but if there’s an audit, you will be asked for proper documentation, and end up paying penalties and more taxes for your extra income.
6. Filing status
There are five kinds of filing status. Make sure to file the right status depending on your situation, as it may end up coming back to bite you in the form of lesser refunds or penalties.
7. SSN ignorance
Social Security Number has been discontinued to be a necessity for filing because of personal security reasons. So, make sure that your 9-digit tax ID is entered correctly, as it identifies everything. If it’s entered wrong, you’ll have to go through the whole process again, and may end up paying penalties too.
Most people who donate to certified charities make this mistake. No matter what your donations were, make sure they stand on their own in the list given by IRS. If they’re not on the list, don’t put them on your filing.
Whether you’re filing for your returns via paper or electronically, your signature is a must. This mistake happens mostly by people who do it electronically. Make sure to put your Personal Identification Number in your returns for it to process.
The most common mistake many people do is missing the deadline. Don’t put your returns filing till the end as if you end up missing the deadline, you’ll have to endure penalties. And if you’re not able to calculate and put your form together by the deadline, file for Form 4868 by the deadline to extend your time to 6 months.
Now that you know the most common mistakes, make sure to go through all of them to make sure you haven’t missed anything.