Common Mistakes People Make On Their Taxes
Each year when tax season approaches, it is mandatory for all citizens to report their income to the IRS, using tax forms. This tends to cause stress to some taxpayers as they need to prepare returns, gather up old forms, and figure out if they will be entitled to a refund or owe money to the Internal Revenue Service (IRS). While the filling up process may seem overwhelming, the best way is to tackle it is one step at a time, and following this process can help avoid any rookie mistakes.
Making errors on your tax return can cost money, lead to missing out on refunds or end up owing more money, not to forget interest and penalties, or the most dreaded outcome of all, triggering an IRS audit.
At Syvertsen Accounting LLC, I am aware of the struggles people face to get their taxes right. To help you avoid pitfalls that could potentially cost you hundreds or even thousands of dollars in misspent filing fees, I have compiled a list of the most common mistakes people make on their taxes.
1. Losing out on deductions, credits, and exemptions
As a taxpayer, you should be keeping track of deductions throughout the year, such as charitable donations, gambling losses, childcare credit, and dependent credit for those who do not qualify for the child tax credit. These are just a few examples out of the many available.
2. Missing the filing deadline
This can be a very costly mistake, as the IRS begins the clock immediately after the deadline for those taxpayers who owe the IRS. The late filing penalty is 5% of the tax due for each month if your return is late, and if your return is more than sixty days late, the minimum penalty is $435 or the balance of the tax due, whichever is smaller.
3. Stressing out about filing
Each year, many taxpayers stress out about doing their own tax returns. However, there are ways you can reduce your stress by doing certain things throughout the year to help make the process less stressful, such as knowing what documentation you need, giving yourself plenty of time, use software or hire a professional.
4. Waiting until the last minute to file
Waiting until the last minute to file is not recommended. If you’re in a situation where you don’t have all of the tax documents you need to complete your return, you will not have enough time to find the missing documents. Another plus point in not waiting to file your tax return is reducing the risk of identity theft. The earlier you file your returns, the possibility of identity theft is drastically reduced. But if you wait to file your return, you run the risk of having someone file a fraudulent return with your information, which will cause your return to be rejected as the IRS will think you already have filed your return. This can cause your refund (if you are owed one) to be delayed until you and the IRS sort out the identity theft case.
5. Filing too early
Filling too early also has its consequences. When you file your return too early, before you have received all of your proper tax documentation, it may cause the IRS to issue penalties and interest on the amount that was not reported on the tax return. Even though most tax documents are issued by the end of January, some documents are issued late. To ensure that you have received all of your documentation, create an account on irs.gov and get your Wage and Income Transcript, which will list everything issued with your social security number.
To avoid these and other mistakes, reach out to the experts at Syvertsen Accounting LLC. I am a seasoned tax accountant in Delaware, OH, specializing in a wide range of accounting and bookkeeping services. I have over fifteen years of experience working for small and medium-sized businesses holding accounting and bookkeeping responsibilities in manufacturing, finance, and the service industry. My services are available to clients across Columbus, Franklin County, Delaware County, Marion County, and the surrounding areas.
For a complete list of my services, please click here. If you have any questions about accounting and taxation, I’d love to hear from you. Please contact me here.
