Common Mistakes on Tax Returns

It’s tax season! So, let’s talk about common tax return mistakes and what you can do about them.

Nothing raises your blood pressure higher than an unwanted letter from the IRS saying you owe more money. Fortunately, there are things that you can do to ensure the odds of it happening to you are rare. So please take a minute to review these common filing mistakes and make a mental note to yourself to help solve them before they occur.

• Mistake 1: Missing some income
  Missing the reporting of some income is the easiest mistake to make and the easiest thing for the IRS to catch. Why? The IRS receives millions of informational returns. Most of them electronically. Their audit programs do a simple match and kick out all tax returns with an underreporting problem. To solve this problem, mark January and February on your calendar. This is when you’ll receive notice from everyone that they are sending your information to the IRS. Save these documents and report them all.
• Mistake #2: The tax change conundrum
  Congress and the president have a bad habit of changing tax laws long after the tax year begins, sometimes even after the year is over. The result is errors on tax returns because there is little time to resolve the filing programming or navigate through the changes. For example, in recent tax years, unemployment income was taxable, then tax-free, and then taxable again. All within a few months. Whenever possible, use a tax professional. It’s the best way to avoid this kind of mistake. And if they do occur, they are much easier to fix.
• Mistake #3: Matching socials
  Mismatched social security numbers and their related names is another common error. This can happen when you marry, divorce, or even move homes. So keep current with social security on any names or address changes. Do the same with your employer.
• Mistake #4: Choosing the right education credits
  Oftentimes, there are a number of competing tax benefits. Choose the wrong one, and you leave money on the table. This is especially true in the area of education, where there are numerous tax benefits. So, sit down for a tax planning session early each year. Go over your situation and review different tax planning scenarios to maximize your benefits.
• Mistake #5: Getting bank accounts right
  One of the worst mistakes that can be made is when you ask for an auto-deposit of your refund in a bank account, and you put in the wrong number. Unfortunately, pulling the money back if it goes to the wrong account is very difficult to do. Your best defense is to double-check and then triple-check any bank number or account number used for auto-deposit. To reduce error potential, only have refunds go into one bank account or simply have a refund check mailed to you.

Errors happen. But fewer are in your future with a little preparation and the right person in your corner.