1. Not filing on time
Know the due date of the tax returns you need to file. If you can’t file on time, be sure to request an extension.
2. Mathematical errors
Arithmetic errors–whether it is on the actual tax forms or on schedules and workpapers used to compute taxable items, make sure to always double check that math!
3. Transposed social security numbers
Ensuring that you have the correct social security number for you and any dependents you claim is crucial to filing an accurate tax return and can prevent red flags from being raised once your return goes through to the IRS’ automated systems.
4. Filing the wrong tax return and schedules
With so many options: 1040, 1040A, 1040-EZ, 1040NR, and so on–just figuring out which tax return to file can be half the battle. Moreover, once you’ve figured out the main form to file, making sure you have all the required schedules A, B, C, D, E, etc. can also sprout just as much confusion. It’s always good practice to read the ‘Who Must File’ section of the tax forms’ instructions.
5. Choosing the wrong filing status
Common gray areas to watch out for when selecting a filing status may apply to married couples who are living apart, surviving spouses, or single parents who raise their kids at home, but may not claim their child as a result of divorce settlements and so on. Really take the time to evaluate what your filing status as this can open or close the door to certain tax credits and benefits.
6. Omitting relevant tax information
Sometimes a W-2 or 1099 gets lost in the mail and you don’t have it handy when it comes time to filing your taxes. Unfortunately, just because you never received the document doesn’t mean you aren’t responsible for reporting the information and paying the tax that comes with it. Be sure to report all applicable tax information, and if you know you’re missing an important document, contact the sender to track it down.
7. Missing out on tax deductions and credits
There are an abundance of deductions and credits that are afforded to taxpayers. Some common expenses taxpayers may incur which could possibly result in a tax break are as follows: medical expenses, charitable contributions, property taxes, tax preparation fees, education expenses, student loan interest, daycare expenses, etc. Read our blog to learn more about the many deductions you can claim on your tax return.
8. Not meeting all of the requirements to claim certain credits
Although there are many tax credits available to claim, it is important to make sure that you are reading the fine print and only claiming credits for which you qualify. Just to list a few, certain credits like the Earned Income Tax Credit have special rules for qualifying children, the American Opportunity Credit has restrictions on how many years you can claim it, and the Premium Tax Credit has restrictions on the type of health coverage you have access to before being able to claim it. You must meet all of the applicable requirements listed in the instructions of the credit forms in order to be able to take the credit on your tax return.
9. Leaving required fields of the tax return blank
More often than not, lines on the tax return can be left blank if they are not applicable to your situation. For example, if you don’t have any pension or IRA distributions, you would not need to fill out Line 16a and 16b on Form 1040. However, if you have $500,000 of taxable income reported on Line 43, there should probably also be a tax amount computed on Line 44. Otherwise, the IRS may have to prepare a substitute for return which may not necessarily consist of all the tax benefits you’re entitled to.
10. Not signing the tax return
When it’s all said and done, the last thing you should always do before sending off that bad boy is sign the return! Whether you are sending in a paper return or e-filing, make sure you have the proper signature or pin.