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The 12 Most Common Tax Filing Mistakes

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12 most common tax filing mistakes

The IRS makes it easy for taxpayers to file their taxes through the use of tax software, but it doesn’t mean that errors won’t occur.

Common tax filing mistakes can lead to extra tax owed or your refund being withheld. Some mistakes that taxpayers make when filing their taxes include taking a deduction that they don’t qualify for or choosing the wrong tax law.

In some cases, taxpayers might even forget to claim a refund or other credits they’re entitled to.

It’s essential to read and understand the current years tax credits and go over your tax return carefully before submitting it to avoid any mistakes that could impact your refund or result in additional costs.

What Happens If I Already Submitted A Tax Filing Mistake

Tax Filing Mistake

Before we get into the list or common mistakes, lets discuss what happens if you do make a mistake. If you have made a mistake on your tax return, the IRS advises that you should file an amended tax return as soon as possible.

Filing an amended tax return is necessary if you need to make changes to your original tax return, such as correcting errors on your income, deductions, or credits.

You can amend your tax return using Form 1040X, which is available on the IRS website or you can simply hire a tax professional to go over your taxes and amend any errors that were made.

Remember that if you make a mistake on your tax return, you are still responsible for paying the tax due in full and on time.

If you fail to file your tax return or fail to pay the tax due, you may be subject to penalties and interest charges. Therefore, it is important to take prompt action to correct any mistakes on your tax return.

#1 – Errors In Deductions Or Credits

One of the most common mistakes that taxpayers make is errors in deductions or credits.

  • A deduction refers to an amount that is subtracted from the total taxable income, which ultimately reduces the amount of taxes owed.
  • A credit is a dollar-for-dollar reduction in the amount of taxes owed to the government.

Many taxpayers miss out on eligible deductions or credits because they fail to properly document their expenses, including charitable donations or business expenses. This can result in a higher tax bill or a lower refund.

It’s important to use tax preparation software or consult with a tax professional to ensure all potential deductions and credits are claimed accurately.

By taking the time to accurately document expenses and claim eligible deductions and credits, taxpayers can significantly reduce the amount of taxes they owe or even receive a refund.

#2 – Incorrect Account And Routing Numbers

Incorrect Account and Routing Numbers

Another mistake taxpayers often make when filing their tax returns is providing incorrect account and routing numbers.

This mistake can cause delays in receiving your refund or even result in your refund being deposited into someone else’s account.

It is crucial to double-check the account and routing numbers before submitting your tax return to the IRS. To find the correct routing number and account number, check the information on a check or contact your bank.

It is also important to note that the IRS does not verify account and routing numbers before issuing a refund, so it is your responsibility to ensure that the information provided is correct.

Taking the necessary precautions can save you time and avoid potential headaches associated with a misplaced refund.

#3 – Improper Deduction Of Charitable Contributions

Improper deduction of charitable contributions is mistake No. 3 that taxpayers should avoid. While charitable contributions can be valuable tax deductions, the taxpayer must meet certain requirements.

  1. First, the donation must be made to a qualified organization.
  2. Second, the taxpayer must obtain proper documentation for any donation above $250.
  3. Lastly, the taxpayer must itemize their deductions on their tax return to claim the charitable deduction.

Improper deduction of charitable contributions could lead to an audit and potential penalties.

Additionally, if the deduction is disallowed, the taxpayer may have to pay additional taxes plus interest.

It is important to understand the rules for claiming tax deductions so that you can maximize your refund without taking unnecessary risks.

#4 – Missing The Filing Deadline Or Not Filing At All

Missing the Filing Deadline or Not Filing at All

One of the most common mistakes that taxpayers make is missing the filing deadline or not filing their income tax returns at all.

This mistake can result in serious consequences, including penalties, interest, and even legal action by the IRS.

It is important for taxpayers to file their tax returns on time to avoid these negative consequences, as well as to ensure they receive any refund they may be owed.

Additionally, failing to file a tax return can also impact the taxpayer’s ability to claim deductions and credits in future years.

To avoid this mistake, taxpayers should consult with a tax professional who can guide them through the tax law and ensure that they file their tax returns on time and accurately report the amount of tax they owe.

#5 – Selecting The Wrong Tax-Filing Status

Selecting the wrong tax-filing status can have adverse consequences on your tax return.

Your filing status determines how much standard deduction, tax credits, and tax deductions you are eligible for.

For example, if you file as head of household when you are actually single, you may receive a lower standard deduction and miss out on certain tax credits.

On the other hand, if you file as married filing jointly when you are separated, you may be liable for your spouse’s tax liabilities.

Tax software can help you navigate these complexities, but it is crucial to understand the implications of each filing status. Taking the time to research and analyze your options can help you choose the most appropriate filing status and maximize your tax refund.

Knowing your filing status is crucial when preparing your tax return as this determines the rate at which you pay taxes.

Here are the 5 Filing Status From The IRS:

  • Single. Normally this status is for taxpayers who are unmarried, divorced or legally separated under a divorce or separate maintenance decree governed by state law.
  • Married filing jointly. If a taxpayer is married, they can file a joint tax return with their spouse. When a spouse passes away, the widowed spouse can usually file a joint return for that year.
  • Married filing separately. Married couples can choose to file separate tax returns. When doing so it may result in less tax owed than filing a joint tax return.
  • Head of household. Unmarried taxpayers may be able to file using this status, but special rules apply. For example, the taxpayer must have paid more than half the cost of keeping up a home for themselves and a qualifying person living in the home for half the year.
  • Qualifying widow(er) with dependent child. This status may apply to a taxpayer if their spouse died during one of the previous two years and they have a dependent child. Other conditions also apply.

Each filing status has its unique tax rates, deductions, and eligibility criteria. Therefore, it’s essential to determine the appropriate filing status for yourself before filing your tax return as this can save you money and help you avoid any errors that can lead to penalties or refunds.

#6 – Filing The Wrong Tax Forms

Filing the wrong tax forms

Filing the wrong tax forms can be a disastrous mistake with the IRS. It can cause delays in processing your tax return, resulting in penalties and interest charges.

It is essential to understand which tax forms are appropriate for your tax situation and tax year, as the forms differ based on individual circumstances.

For example, an individual who has earned wages, salaries, or tips would need to file a Form W-2, while a self-employed individual would need to file a Schedule C in addition to their individual tax return.

It is always wise to double-check your tax forms and review the instructions provided by the IRS to avoid any potential mistakes.

If you are unsure which forms you need to file, we highly recommend you hire a tax professional to help you do it right.

#7 – Incorrect Social Security Number

Social Security numbers are used as a primary form of identification in the United States, but they are also frequently used in connection with taxes.

As a taxpayer, your social security number is used to identify you in the IRS system and to calculate tax credits that you may be eligible for. Unfortunately, oversights related to social security numbers can have serious consequences.

For example, if you accidentally transpose numbers on your social security number when filing your taxes, it can result in delays, penalties, and even an audit by the IRS.

Additionally, businesses and organizations may also require a tax ID number, which is different from your social security number. It is important to keep accurate records and double-check all social security numbers on tax forms to avoid these kinds of oversights.

#8 – Mailing Your Paper Return To The Wrong Address

Mailing your paper return to the wrong address

Mailing your paper tax return to the wrong address can be a stressful situation. It’s important to double-check the address before sending off the return.

If the return is sent to the wrong address, it might delay the processing of the return or even result in penalties.

It’s important to stay up-to-date with the correct address by checking the IRS website or contacting the IRS directly.

If a mistake is made, it’s possible to track the return through the postal service, but it’s best to avoid this situation altogether by practicing a little extra diligence before sending off your paper return.

Remember, even if you file electronically, it’s important to keep track of any paper returns that are due.

#9 – Forgetting To Review Payroll Withholding Deductions

Forgetting to review payroll withholding deductions can have serious consequences.

If an employee has too little money withheld from their paycheck, they may owe a substantial amount to the IRS when they file their tax return. This could result in a large tax bill and potential penalties for underpayment of taxes.

On the other hand, if too much money is withheld, the employee may miss out on a larger refund or end up with less money in their paycheck each pay period.

It is important for both employees and employers to review payroll withholding deductions regularly to ensure accuracy and prevent any surprises come tax time.

Employers should also stay up-to-date on IRS regulations and make any necessary adjustments to withholding rates to avoid any potential issues.

#10 – Making Math Errors With Credits Or Deductions

tax filing math error

One of the most common mistakes people make when filing their taxes is making math errors with credits or deductions.

These mistakes are often the result of not understanding how to properly calculate deductions or tax credits. Tax software can make the process easier, but it’s still important to double-check your calculations.

Making a math error can lead to an incorrect refund amount, or worse, an audit from the IRS. It’s important to take your time and ensure all of your numbers are correct before you file your tax return.

Remember that deductions and tax credits are two separate things, and it’s important to understand the difference between the two.

If you’re unsure about how to properly calculate these amounts, seek assistance from a tax professional or use reliable tax software.

#11 – Forgetting To Sign Your Tax Return

One common mistake taxpayers make during tax season is forgetting to sign their tax return. It may seem like a small oversight, but it can delay the processing of your tax return and your refund.

When you file your return electronically, you sign it using a personal identification number (PIN) or you digitally sign the return.

When you opt for a paper tax return, you need to physically sign it. If you’re married filing jointly, both you and your spouse need to sign the return.

The IRS won’t process your tax return if it isn’t signed, and any delay in processing can hold up your refund. So remember to double-check that you’ve signed your tax return before you file.

This is one of those crucial tax tips that could save you a lot of headaches come tax season.

#12 – Failing To Hire A Tax Professional

Failing To Hire A Tax Professional

Not hiring a tax professional can be a costly mistake.

Filing taxes can be complex, and without the proper knowledge or experience, one could make an error that could result in costly consequences.

Tax professionals are trained to identify all the possible deductions and credits that can reduce your tax liability. By not hiring one, you risk missing out on many of these tax savings opportunities.

Additionally, if you make a mistake on your return and are audited by the IRS, you may end up paying a penalty or additional taxes.

Overall, taking the time and expense to hire a tax professional can save you money and prevent future headaches.

If you need help filing or amending a tax return, give us a call today at 877-860-3730 for a free 15 minute consultation.