Author: The Missing Ink LLC
Tax season is nearly here. Now is the time to begin preparing for filing your tax returns.
Common errors can easily be prevented. In 2019, over 1.9 million tax errors were made on behalf of tax filers. Over 50% of those errors were due to tax calculations.
Here are the top easy mistakes to avoid when filing your tax returns this year:
Contrary to popular belief, it is easy to misspell your own name. Double-checking for accuracy is of utmost importance.
The name listed on your tax return must match the name on your Social Security card. Be sure to include your middle initial or name if it is on your SS card.
Wrong Filing Status
If you file in the wrong filing status, you may have issues with your tax return. IRS.gov provides a helpful interactive tax assistant to help you.
There are 5 filing statuses. They include:
The right tax software can also assist you in choosing the right filing status. You must be sure to choose the correct filing status—such as married status—when you file your return.
Sending in unsigned tax forms is an easy oversight. It is imperative to understand that an unsigned form is not valid.
This occurrence can stall your tax refund. You can easily avoid this error by filing your return electronically. You will use a digital signature instead of a hand signature.
Whether you or a certified accountant file your taxes, your math must be accurate. Millions of inaccuracies happen each year due to math errors.
To prevent the IRS from sending you a notification regarding math errors, double-check your math. Use tax software or a CPA to handle your calculations. Your errors can stall your return.
Missing Out on Tax Deductions
Tax deductions are a great way to save money. Tax deductions lower the amount of taxes you owe. They are subtracted from your taxable income and save you money.
Child and Dependent Care Credit and home office deductions are the most commonly missed tax deductions. You may end up getting taxed on more than you should be if you miss out on eligible deductions.
Using Wrong Account or Routing Numbers
Double-checking that your account and routing numbers are correct is vital. Just one wrong number can result in your money getting delayed.
Your tax return must have the correct account or routing number to ensure you receive your tax refund. You will undoubtedly have to wait a long time to get your money from this simple mistake. Remember that:
- The IRS will verify your routing and account numbers before depositing any available refunds.
- If your numbers are entered wrong or do not pass the validation check, the IRS may send you a paper check in place of a direct deposit.
- If the account number you enter belongs to another person, they may receive your refund. It is then up to you to work with the bank to recover your money.
Not Paying Estimated Taxes
If you own a business, you must pay your estimated taxes. Any money you receive as a freelancer, entrepreneur, side hustle, or other does not withhold taxes. You are then responsible to make the quarterly estimated tax payments to the IRS.
Two serious outcomes can happen if you miss these payments, including:
- Larger than anticipated tax bill
- Penalties and interest charges will be attached to your unpaid tax liability
Talk with a reputable tax professional about quarterly payments and what you owe. There will be no surprises, and you will save money on penalties and high-interest rates.
Avoiding easy tax mistakes is your best bet to receiving your tax refund on time. If you own a business or are a freelancer, you must make your quarterly payment. You risk incurring penalties and interest if you miss these payments.
Double-checking your entered information and filing the correct filing status is crucial. Work with a tax magician to ensure your tax paperwork is filed correctly.