The dreaded tax season has passed, but only to return every year. If you faced hassle during tax season, this time around, it’s best to be better prepared next year. Start by organizing all the information and inspecting your returns to ensure they are accurate and complete. Unfortunately, there are dozens of tax mistakes you can make which can cause you a lot of trouble in the long run. Here are the most common tax mistakes you should avoid this coming tax season:
Filing Under the Wrong Status
The IRS allots different income tax rates and awards depending on your filing status, which can include single, married filing separately, qualifying widower, and head of household. For example, married couples who file jointly are entitled to twice the deductions as single filers whereas married couples who file separately are subject to different rules and regulations.
Not Filing On Time
Unfortunately, most people wait till the last few days to file their taxes. This leads to complicated results that add on even more stress in the future. While most taxpayers are tempted to wait till the last few weeks, start early. In addition to paying interest, you will also be charged a fine by the IRS for filing late. The total amount varies on how much someone owes and how long they have waited to pay. Keep in mind that it does not take long for interest and penalties to mount up. So, why not start sorting your documents now so you can avoid hassle at the last moment.
Despite the number of innovations and options available for tax filing, most people still file their taxes manually. This might help you save money but on the downside, it increases the risk of mathematical errors. Placing the wrong digit in the wrong column can either cause you to pay more taxes in the future or prevent you from receiving a large sum of money. Consider setting up tax software to significantly reduce the likelihood of errors.
Applying For the Wrong Amount of Deductions and Credits
Claiming the wrong deductions can be construed as tax evasion. In such cases, you are at risk of being audited by the IRS or could even go to prison. When it comes to paying taxes, if you owe it, pay it. Take advantage of every credit or deduction you are eligible for but remember to play by the rules.
Overlooking Additional Income
Make sure you include any additional income on your returns. For instance, if you took on some part-time work, the IRS will know how much you earned from it, thanks to your 1099 forms. However, if you don’t mention it on your return, the IRS might penalize you for it.
Avoid the above mentioned mistakes for a stress-free tax season. This will ensure your income tax is calculated and filed perfectly and you don’t face any hassle. However, if this feels like too much work, the best option for you is to hire a professional to help you file your taxes. This way, you can focus on your job while the professional takes care of your taxes!