Ahh, tax time! The time in America where everyone gets a little edgy, a little nervous and a little anxious as we patiently await our peril (owing more to Uncle Sam) or our “profit” (a big refund).
Accountants are settled in to their cubby holes, people are scrambling to gather all their documents and Uncle Sam waits with a grin. Tax time is great isn’t it!?
Every year, there are millions of people who make some big mistakes when filing their taxes and it just shouldn’t be. These are easy ones to avoid when filing your 1040!
Let’s take a look at a few of them:
Missing the April 15 Dealine
For all you procrastinators out there, this one’s for you. Of course no one likes to pay or file for that matter, but the longer you wait, the more anxiety builds up and the more likely that you’ll not have all you need in terms of documents, which means you’ll need to file an extension.
Get an early start, gather everything and double check your documents – then file as soon as you can so you don’t flirt with that deadline.
For those of you who say, “I’d rather not file because I know I’ll owe money” – that is just plain silly. The IRS will tack on some monster penalties for what you owe them. They are not an entity you want to mess around with.
Also, for those who do meet the deadline and are asking “where is my tax refund” you should be aware that the IRS works on a schedule for refunds and it may take a couple weeks for them to process your request.
Not Reporting All Income
This sounds easy enough – if you have a W2, you put that number down. But, many people forget to include things like interest and dividends from savings, CDs or other investments.
What about income from a side hustle, hobby or that multi-level marketing business you joined last year?
Servers, don’t forget to include your tips – parents, do you need to include your teenager’s income? You don’t want to get a note in a few months from Uncle that says you owe more money – take care of it now.
Missed Deductions or Not Itemizing Deductions
This one is so easy, yet can be a big mistake – and a costly one at that.
Take a look at this list from the IRS, review the rules and see if you can deduct any of these on your 1040:
|Medical and Dental Expenses||Topic 502|
|Deductible Taxes||Topic 503|
|Home Mortgage Points||Topic 504|
|Interest Expense||Topic 505|
|Casualty and Theft Losses||Topic 507|
|Miscellaneous Expenses||Topic 508|
|Business Use of Home||Topic 509|
|Business Use of Car||Topic 510|
|Business Travel Expenses||Topic 511|
|Business Entertainment Expenses||Topic 512|
|Educational Expenses||Topic 513|
|Employee Business Expenses||Topic 514|
|Casualty, Disaster, and Theft Losses||Topic 515|
Wrong, Duplicate or Missing Social Security Numbers
Seriously? This one sounds simple enough, yet millions every year either put down the wrong numbers, duplicate their social number for their spouses or just completely forget to put down their social security number when filing their taxes.
The easiest way to correct this is just to double and triple check – make sure you have everything filled out properly.
Even if you use an accountant or a tax-prep service you should probably e-file. It’s simple, it’s easy and it speeds up the refund. You can get your refund direct deposited into your bank and not have to worry about lost or stolen checks!
If you’re doing your taxes yourself and using software like H&R Block’s At Home Online FREE Edition, then e-filing is even easier. Take advantage of technology!
If you’re looking for other tax software, check out Amazon’s deals.
What else would you add to the list of biggest tax-filing mistakes?
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