Common Taxpayer Mistakes to Avoid
Although tax rules and deadlines are not always constant and may change throughout the years, there are several common mistakes by taxpayers that are timeless whether it’s for simple or complex tax returns. Just one simple slip up made on paper or by computer can cost you or delay your refund. Here are some common tax-filing mistakes that show up almost every tax season and knowing these can help you avoid making similar mistakes.
1. Social Security Number Oversights/Misspelled, Unofficial, or Different Names – When either the social security numbers or the names of a taxpayer don’t match the tax identification number that the Social Security Administration has on record, it will result in the IRS delaying or completely rejecting the tax return. The IRS verifies social security numbers with the SSA when they need to process returns, so if the names or numbers don’t match, there can be problems.
2. Bank Account and Routing Numbers – The more numbers you enter on a tax form, the more likely you are to enter them incorrectly. Always double check the numbers because one or two incorrect digits can mean a lost in your refund entirely, or penalties and interest if the IRS didn’t receive your payment.
3. Reporting All Income – If you have a side job aside from your main job, make sure to report the income you earned from all jobs on your tax return. If you have received 1099 forms from your work, be sure to report those as well since the IRS knows exactly how much you made as soon as you earned it because the financial firms send a copy to the tax agency. Failure to report any income can result in the IRS contacting you and telling you that you owe more taxes and or you can be penalized for unreported earnings.
4. Filing Status Errors – There are five options to choose from when entering your status on your tax return and each option can make a difference in your tax bill so it’s always safe to double check what you’ve put. Do your research and know what each tax-filing status entails and then choose the one that best fits your personal tax situation.
5. Not E-Filing – Electronic filing is a much faster, easier, and most accurate way to file your tax returns. Although you can make mistakes on both paper and electronic filing, it’s less likely when you e-file your returns. E-filing keeps your information secure and the IRS typically processes e-filed returns quicker meaning you can get your refund quicker as well. Also, you receive a confirmation via email and/or text once your file is processed.
6. Procrastinating – There are several taxpayers that put off filing until the very last minute and then stress over it when their accountants are busy during tax season. Rushing your tax return at the very last minute means you more likely to make errors. Always start on your return as soon as possible as you may need extra time to meet with your tax advisor or if you’ve come across major life changes, you might need more time to figure out any additional deductions.
These are some common mistakes made by individual taxpayers. It’s always good to double check and make sure all information, names, DOBs, SSNs, or any data is input correctly. Make note of these mistakes to prevent yourself from committing similar ones in the future.