Published on 08/05/2021
Tax season can be stressful as such. The miseries of the global pandemic have made the tax season even more harrowing. Not to mention the reforms in laws and financial aids that can throw off your annual tax strategies. Even the most prepared tax filers are facing issues this year. Some are expecting either one or both of their stimulus payments and some are grappling with rebates. And those who benefited financially this year are also having their fair share of troubles this tax season.
What can be more annoying is making small mistakes that can burn a hole in your pocket. Nothing hurts to check and recheck your filing to save every penny that you can. Watch out for these common tax filing mistakes this season.
Failure to report all income
When employees receive tax forms from their employers ahead of the tax season, a copy of the same tax forms is also sent to the IRS. Hence, it makes all the more sense to collate all W-2 forms and 1099 forms. All your income must be reported to avoid the IRS from conducting an audit alleging you of hiding income. Remember, unemployment benefits are also categorized as income and must be included in your taxes.
Not taking into account tax credits and deductions
One of the biggest goof-ups that taxpayers can commit is either claiming too many or too few tax credits and deductions. Trying to stake claim to tax rebates that you are not entitled to can raise a flag at the IRS. On the other hand, feel free to claim as many rebates as you are allowed to reduce your tax burden.
Errors in Social Security Number
Recording a wrong social security number is a grave tax error that thousands of taxpayers make each year. A lot of taxpayers credit this to lack of time and hurrying up the process. Additionally, the number of taxpayers not attaching their social security numbers is also humongous. Taxpayers need to double and triple-check personal details especially the social security number to prevent a major tax blunder. If you are filing joint returns or working with a tax professional, go through each detail with a microscopic lens to avoid gaffes.
Missing IRS deadlines
The deadline to file your income tax is less than 2 weeks from now, i.e, May 17, 2020. If you are not in a situation to file your taxes just now, make sure to file for an extension before 17 May. Note that you will still have to pay up your tax dues within the date.
Consequently, make sure that you complete making contributions to IRA and/or Roth IRA accounts by May 17, 2020. Any IRA or Roth IRA contribution made after May 17, 2020, will not be considered for the 2020 tax season. If you miss the tax deadline by a few hours or don’t apply for an extension, you will have to pay fines as penalties.
Not Signing Tax Returns
While you are taking care of the most important details on your income tax return, you may likely miss out on some of the minutest of details. Another frequent mistake that taxpayers make is not signing and dating their income tax return before submitting it to the IRS. The IRS will NOT accept any income tax returns that are not signed and dated. Your tax return filing may be flawless, but it will not be considered if either the signature or date is missing. The IRS may instead slap a penalty on the taxpayer for this.
Not filing income tax
With all that is happening in the world around us, a lot of people are expected to miss on filing taxes at all. If you feel like you are not in a space to file your taxes right now, you should apply for a deadline extension. Failing to file your taxes or the extension will lead to heavy fines by the IRS. However, the deadline will only buy you some additional time- you will ultimately have to file your taxes to avoid the IRS ire.
Checking Direct Deposit information
Make sure that all the information you put in your income tax returns about your back accounts is correct. Double-check to avoid any discrepancies. This will allow the IRS to disburse your tax refund with ease and speed. You do not want to follow up with the IRS in case your refund has gone to someone else because you put incorrect bank details.
Not including payment information
It is always recommended to keep a track of all the payments you are making to the IRS or any federal authority for that matter. In case your payment is not credited with the authority for any technical reason, you have the details of the payment made by your end. Make sure that your payment gets sent to the IRS. Ensure that you enter the correct information for the payment to get credit from your account.
Making calculation mistakes
Mathematical mistakes while calculating your taxes is a mistake that can cost you additional dollars. You do not want to underpay your taxes or overpay; both the situations hurt your pocket.
Choosing the wrong filing status
If you are married and choose ‘single’ as your status, it could affect the amount of taxes you owe to the Govt, but it will also affect the amount of credit you can claim. Make sure you correctly enter your filing status to avoid redoing your taxes.
One can make numerous mistakes while filing their taxes. It is always recommended that you get a professional to do the job for you. It could save you a fortune- quite literally.