4 Common Mistakes You Should Not Make During Tax Season
Tax preparation requires some peculiar skills, including accounting, mathematics, paperwork, and most importantly, practical knowledge of the latest tax laws. Even though plenty of people try do their own, that not be the best of ideas.
Preparing the tax returns on your own can turn out to be a disaster. That said, even a minor mistake in calculation or comprehension of the tax-law can result in serious problems. It could lead to IRS opening an audit of your taxes to look through every detail.
Here are some common mistakes people make while preparing their tax returns.
1-Using wrong tax form
One very common issue people face is they don't know which tax form they should use. It can be difficult for people because they have to choose from several options. One easier way to counter this problem is by using tax preparation software. The developers of these products regularly update them to make sure that you have the latest and correct tax forms.
Moreover, if you are still not sure about it, consulting a tax professional will be very helpful. Moreover, the IRS website will be a good option for guidance related to form selection if you are doing it on your own1.
2-Numbers/Figures Mix-up
Beyond the basic W-2 and 1099s which filling in details can be straightforward, there are other issues. A really sensitive or risk-prone part of the process because mathematical errors are always a possibility. If you are not well versed in doing this, you may end up making serious mistakes while calculating things. Moreover, if there is a discrepancy in your tax return, your amount payable or amount refundable can be negatively affected2.
3-Incorrect or Misspelled Name
Another very common mistake people make is misspelling their names while preparing their tax returns. Some people even file their tax returns with an incorrect name. For instance, the second name for females changes after getting married. Therefore, make sure that you are using the official name on your tax return3.
Your name and social security number must match, and it can cause serious problems if you failed to inform the Social Security Administration regarding your name change.
4-Not Adding Extra Income
You will also receive 1099 (for additional earnings) if you earned additional income apart from your regular job. So, when you are preparing your tax returns, make sure you have accounted for your additional income as well4.
The IRS also gets notifications about your additional earnings when you receive 1099. That means, if you failed to mention your additional earnings on your tax return, IRS would notify you about your mistake. This can consequently lead to tax penalties.
Try To Keep Your Tax Return Accurate
Having a good understanding of common mistakes people make in filing their tax returns and avoiding them is very important. You can always get help by searching for different options online. However, make sure you are hiring a trusted and reputable person or service.
1. https://www.irs.gov/newsroom/which-tax-form-should-you-file
2. https://www.neamb.com/personal-finance/4-tax-return-red-flags-that-could-get-you-audited
4. https://smallbusiness.chron.com/happens-dont-report-self-employment-income-16135.html
5. https://blog.taxact.com/dont-make-these-mistakes-on-your-tax-return/
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