You probably have your W-2 and 1099s by now. It is time to begin preparing your tax return. It is better to start now rather than nearer the due date. Rushing to make the tax deadline only leads to tax preparation errors, which could either delay your refund or affect the amount of tax due.
So just what are some of the common errors to avoid? Here is our list of the most common.
The first is having a wrong name on the tax return. Misspellings happen. The name should match the name on your Social Security card. If the name on the card is incorrect, contact the Social Security Administration office to fix the situation.
After checking the names on the return, the next item to review is your Social Security number. This is especially important for your children’s numbers. Don’t go the “I think this is it” route. Benefits like the tax credit for children depend on the validity of the Social Security numbers entered.
The next item up is your filing status. There are five to choose from: single, married filing jointly, married filing separately, head of household, and qualifying widow(er) with dependent children. Checking your filing status becomes especially important if your life situation changed during the tax year.
Math mistakes are also a common problem. If you are self-preparing your return without the use of tax software, be sure to double check all of the calculations. Issues also arise in transferring data from one form to another or from a worksheet to a form. Tax preparation software can help reduce these types of errors, just don’t forget to double check your inputs.
Another issue occurs when taxpayers try to take tax credits or deductions that they really shouldn’t. These items might have rules or income phase-outs that must be considered. If you are unsure of any of these, the IRS has an abundance of information available on www.irs.gov.
Once you have completed your return, you may be shown that you will receive a refund. In this case, another source of trouble is not listing the correct bank routing and account number for doing a direct deposit. Make sure these are correct, as it is difficult to track down a missing refund if the routing and account numbers are wrong.
Before mailing your return to the IRS, be certain to sign the form. If it is a joint return, both of you will have to sign. You might think that electronic filing avoids this situation, but this is not the case. In order to electronically file, you will need a signature in the form of a personal identification number (PIN). Forgetting to do this can cause problems.
So you have slowed down, obtained the right information, read the instructions where needed and checked your work, but mistakes still happen. The most common error is that the information you provided on the return doesn’t match up with the information the IRS has from materials such as your W-2 or 1099s. In this case, the IRS generally recalculates the tax and sends you a bill for the amount due or increases your refund. However, don’t just take their word for it. Check the calculation. If you think the IRS made a mistake, respond to the notice and let them know. Provide all the information needed to support your position.
Finally, if you can’t file on time, consider obtaining an extension of time to file using Form 4868.
This does not give you extra time to pay the tax, so be sure to give a good faith estimate as to what you owe.
What this will give you is more time to prepare an error-free return. Lastly, if you have a complex financial situation or questions about your return, it is always best to consult an accountant or certified financial planner.