Tax Time!!! Let’s Make 2019 Tax Season Error Free
Filing taxes whether on your computer or paper forms, making mistakes on your tax return can cost you in the form of penalties and may also delay your refund by weeks or months. Even simple errors on your tax return can make you to get a notice from the IRS to overpay your taxes or get a smaller refund.
Hayden Adams (CPA & director of tax planning at the Schwab Center for Financial Research) said: “Any error can trigger a notice.”
To meet the April 15 Tax filing due date looming, it might tempt you to rush through tax planning, preparing and filing income tax return. In that case, rushing can to result in mistakes. The more you rush, the more you’re probably going to commit errors.
Although Tax preparation software can speed up your refund by filing your tax return and requesting refund electronically. They can keep clients from committing errors on their yearly tax returns and assuring that your tax return won't be delay. It has undoubtedly shortened the time it takes to set up a tax return and cut down mathematical errors yet doing it yourself on this year is much thorny due to changes in new Tax Law, as computers can’t get what they don't have a clue or don’t know.
The best defense to maintain a strategic distance from red flags is to peruse up on the new tax law, audit your return before filing it could make it simpler. Here are the most common tax-filing errors people make and ways to avoid them.
1. Wrong Personal InformationNames are important, while filing taxes. When the name of a taxpayer doesn’t match the tax identification number on the first line of Form 1040 then that difference can cause the IRS to slow down the processing of the tax return.
If you’re married or having child put your spouse name and their Social Security number (SSN) in the space at the far right after own name in the space or check boxes, for “spouse’s name” and “spouse’s SSN.”
Many women change their sur-names after the marriage. They should alert the Social Security Administration (SSA), of their name change soon after their wedding, to ensure that their new name won’t cause a problem while filing their first joint tax return. This could be applying in case of divorce, or legally changing name for any other reason. Your Personal information comprises:
- Your name and your Spouse name
- Your address (In case you moved)
- Your and all your dependents SSN
- Your signature, sometimes in the rush you forget to sign the return so first make sure it’s there. A return should be properly signed and submitted. In case of joint return, both must sign.
- Electronic Filing PIN, if you are filing tax returns electronically then it also requires a signature. In e-file case your signature is in the form of a Personal Identification Number (PIN). Don’t Mess PIN for e-filing with an Identity Protection PIN
- Filing status (in case your status has changed)
2: Errors in Choosing Wrong Filing StatusAttention Taxpayers: Make sure that you have chosen the correct filing status for your situation. Each status could make a difference in your tax bill. Make sure you know what each tax-filing status entails i.e., divorced, separated, new married, single parent, then choose the one that best fits your tax situation.
Single parents have to choose the filing status of head of household. This comes with a lower tax rate or a larger deduction.
it’s usually better to file as married filing jointly than married filing separately, for those couples who are going through a divorce or get separated as this can save you from certain credits and deductions.
3. Get The Calculations RightThe most common error in preparing tax returns occur in calculation. These mistakes in calculation can reduce your tax refund or result you a penalty.
Mostly CPA firms use Tax calculator to file your return which can help reduce math errors. The built-in calculators can add, subtract and insert numbers on additional forms as needed. But getting the numbers right is crucial. It makes a lot of tax difference if you enter $4,500 while the correct figure is $5,400. So you have to make sure your numbers are correct. Choosing tax preparation software or a tax professional can save you from penalty and you don't have to do the calculation on your own.
IRS examine tax returns and if they find a discrepancy, they let you know and refigure your taxes for you which results late refund. So go slowly, double-check your digits and don’t give them the chance. Make sure your math entries are right and you are using the most update IRS tax table.
4. Wrong Bank Account NumbersIf you are filing you Tax Returns electronically, it seems fast and easy because you are supposed to get your refund back in a few weeks. But it’s only achieved if you provide the right bank routing. Make sure you double-check the bank account numbers correctly. Error can lead to delay of six to eight weeks.
If you have entered a wrong account number your refund could end up in someone else’s account and you might not be able to retrieve your refund. To avoid this, File Form 8888 with your individual return to divide your Tax refund into 3 accounts. If not, then make sure you have entered your account number correctly because IRS have no procedure to replace lost electronically transferred funds.
5. Misreporting income you earnedWith few exceptions, all your income is taxable you earn, you have to report it to the government even if you didn’t receive a 1099 or W-2 form for the income. You have to report if even if someone just gave you $50 or a little extra money.
If you are a freelance or independent contractor than seller will issue a 1099-MISC to you in case you paid $600 or more, you have to keep this as a record even if someone paid you less than $600, you still report the income so you can claim in coming April’s tax deadline. You must consult a CPA firm, if you receive any type of 1099 form and you’re not sure that where the information has to enter on your return. IRS also receives copies of your forms so don’t set this issue aside because you are not sure what to do with it.
To prevent it check the list below that which forms belongs to your scenario:
- Form W-2 for Earnings like wages and bonuses
- Forms 1099 for Self-employment and investment income. If you receive an error in this contact the source person for correction.
- Income from prizes, tips or win through gambling must be reported.
- 401(k)s for Retirement income depending on your income.
6: Don’t be late to File on Time or Request Extension2018 tax returns filing deadline is April 15, 2019. it's April now and you have not even started preparing your return yet. Relax. If you need more time than You're not in trouble, you can file for six-months extension, which gives you due date until October 15, 2019. However, taxpayers who live in Maine or Massachusetts have two extra days, their due date is April 17, 2019, due to legal holidays on Patriot’s Day and Emancipation Day which falls on Monday, April 15, 2019 and Tuesday, April 16, 2019 respectively.
But Keep in mind that having extension of time does not save you from paying your taxes. You’re still required to send tax you may owe with Form 4868 to file six-month time extension request by April 15th or to face interest and penalties due to late payment.
So, It’s far better to hire a CPA firm to prepare your tax returns and then file it on time without mistakes. Even that If you enter an item having a negative number, don’t use minus symbol without brackets because it leads to an error as IRS computers can’t recognize it and read the negative entry incorrectly.
7. Failing to Itemize Excessive DeductionsItemizing deductions can save you but for many people, itemizing requires more effort taking the standard deduction which nearly doubling under the new tax law, it seems to save less money this year. Certain deductions can be a red flag for the IRS—especially for self-employed taxpayers who itemize and for individuals with large charitable contributions relative to their income. Deductions can be tricky for self-employed and individual taxpayers who itemize expenses with large charitable contributions, transportation, meals, home offices, relative and phone use to their income.
An Easy way to Fix Errors:According to the IRS source, people are likely to get more mistakes on their tax return. There is less time left in filing. Don’t need to take that pressure? Hire SG Inc. CPA to make your filing tax return a trouble-free process.
They help you to determine what credits and deductions you qualify for and either you better off for claiming the standard deduction according to the new tax legislation and guarantee that they'll file your tax return without mistake. They can help you to avoid rejected returns, delayed refunds, and annoying IRS notices.