7 common tax return blunders to avoid
Filing a tax return can be complicated and overwhelming, especially if you have more than just the basic w-2s to submit. Being aware of some of the most coming errors tax payers make on their tax returns can help you possibly avoid additional fines or penalties when filing!
- Not reporting all of your income – Everyone is aware they need to file their w-2, but did you know that you need to also report all freelancing income? If you work for or own your own photography business (for example), you need to make sure to file any income earned on IRS Schedule C on your standard 1040 tax form. You may receive a Form 1099 for this work. Hang onto it!
- Not taking full advantage of IRA contribution limits – Although the majority of tax benefits reset at the beginning of the year, your IRA contributions count through April 15th! Most traditional IRA (or Individual Retirement Account) are tax-deductible up to $5,500 (up to $6,500 if you’re over age 50). This goes the same for a Roth IRA provided your income is below $114,000 yearly (or $181,000 for joint tax payers).
- Not double checking your bank account and routing numbers before submitting – No matter whether you are owed a refund or you owe the government, check and then double check that your bank account and routing numbers are right before submitting! Worst case scenario is that you could lose your refund or accrue significant penalties for lost payment, if you owe.
- Entering your social security number wrong or using unofficial names/nicknames – This is one of the most common reasons for a rejected tax return! The IRS verifies everyone’s social security numbers before accepting a tax return. The same goes with names – you must use your legal name and not a nickname when filing.
- Paying too much to file your taxes – Taxes shouldn’t cost an arm and leg, especially if you don’t have anything complicated. There is even free software out there if you look hard enough. Take your time and shop around.
- Not e-filing – E-filing (or electronic filing) is the quickest way to file! The IRS also processes refunds much quicker when they are electronically filed. You also are able to get text and email notifications that will keep you in the loop of where your tax refund is in being processed.
- Procrastinating – Errors are most commonly made by people rushing to the filing deadline. Start early, plan ahead and save yourself the hassle and heartache of having your tax return rejected and having to pay late fees.
Make sure you have all of your tax forms available before starting the tax return filing process to reduce errors and make it as quick and pleasant as possible! Remember, the tax filing deadline is April 15th. Plan accordingly! If you are interested in knowing more, please see taxreturn247.com.au for additional information!