8 Common Tax Preparation Mistakes to Avoid
Between piles of paper work lists of numbers to crunch, it is not hard to miss a thing or two when you are preparing your federal and state tax returns. However, some mistakes could lead to the loss of a valuable deduction, or even worse, an IRS penalty.
Simple Math Errors
Before sending in those forms,
go over your math a few times to make sure your return is 100% accurate. You could get fired, or even audited if you add an additional zero somewhere, or put a decimal point in the wrong spot. Crunching the numbers one last time is more than worth taking such a risk.
All Source of Employment
If you worked in more than one job this year, you need to make sure that you list them all on your tax return. If you do forget to list any income, you could be accused of tax evasion. Rather than go through all the hoops that tax evasion will put you through, make sure to list any and all sources of employment, no matter how long or short they were.
Charity Misinformation
Making a charitable donation is more than good for your karma; it is good for reducing your tax liability. However, the IRS is becoming stricter with contributions, and if you forget to list the charity correctly on your tax forms then you will receive no deductions.
Marital Status
Even if you were divorced fairly recently, it is still necessary to list your current marital status. The IRS is going to get suspicious when your ex-spouse lists themselves as single and you do not. Although it is not technically tax evasion, there could be financial penalties involved if the IRS chooses to audit you.
Childcare Costs
Children and students of all ages require large amounts of funding for everything from childcare to education costs. Fortunately, the IRS allows you to deduct expenses spent on childcare. However, these credits have many qualifications, so make sure you are fully qualified before you submit your forms.
Unearned Income
Believe it nor not, the IRS already knows how much unearned income you have made this year. In addition to forms like 1099, the IRS also has the ability to monitor your bank account activity. To avoid penalties and fines, keep good track of your unearned income throughout the year and list it all on your tax return.
Deadline
Missing the April 15th deadline is not the worst mistake you could make... unless you also forget to file for an extension. An extension gives you an additional 6 months to file your return forms, at no additional costs.
Signature
It is surprising this mistake even makes the list, but sadly it is true. For some reason when people are flustered over crunching numbers and attaching receipts, they forget important details like signing the documents—possibly because the signature and date is often the last are often the last things to do.
