According to the IRS, one of the most common mistakes people make when filing their taxes is not including essential information. Are you concerned about making errors in filing taxes?
It can be difficult to keep up with the various tax codes, deadlines, and paperwork that come with preparing for taxes. But did you know there are common errors that taxpayers make during this process? Knowing which ones to watch out for is key to avoiding costly delays or penalties in filing your taxes correctly.
In this article, we look at 8 common errors when it comes to filing tax returns. Learn how to navigate the complicated process of filing taxes and avoiding any fines. We’ll cover tax credits and deductions, as well as tax filing deadlines.
Preparing for tax season doesn’t have to be daunting. Read on to avoid these common errors in filing taxes.
1. Not Filing Taxes on Time
One of the most common mistakes people make when filing taxes is not filing on time. Even if you can’t pay your taxes in full, you should still file your return by the due date to avoid late fees and penalties.
To find out when to file your taxes, you should check the IRS website. The tax filing deadline is typically April 15th each year, however, this date can vary depending on certain circumstances.
For example, if you are self-employed and need to file a Schedule C form, the deadline for filing your taxes can be extended until October 15th.
2. Miscalculating Deductions and Credits
Another common mistake when filing taxes is incorrectly calculating deductions and credits. This can lead to either an incorrect refund or a higher tax bill than you might have expected.
It’s important to double-check all the deductions and credits on your tax form before submitting it. If you are unsure of what qualifies as a deduction or credit, consult an experienced accountant or tax preparer. If you’re unsure where to start contact these international tax accountants for useful advice.
If you miscalculate your taxes, you could end up owing money to the government. Depending on the severity of the mistake, this could result in hefty fines and penalties. For instance, if you underpaid your taxes by more than 10% of what was due, the IRS may impose a failure-to-pay penalty of up to 25% of the amount due.
3. Claiming the Wrong Filing Status
Your filing status is important because it determines which tax forms you should use and how much your deductions are worth. If you claim the wrong filing status, you could end up paying more taxes than you owe or receiving a lower refund amount than expected.
To ensure that you are claiming the right filing status, there are several factors to consider such as your marital status, dependents, and income. If you are unsure of what filing status to choose, an experienced tax preparer or accountant can help advise you.
4. Failing to Report All Income Sources
It’s important to report all of your income sources when filing taxes. This includes wages from a job, self-employment income, investments, and other sources of income.
Failing to report all of your income can result in serious consequences. The IRS may impose fines or even criminal penalties for not reporting the correct amount of income. To make sure you’re reporting all of your income correctly, keep detailed records throughout the year. This includes pay stubs, bank statements, and 1099 forms.
5. Missing Out on Tax Breaks or Incentives
There are numerous tax breaks and other incentives available to taxpayers. These can include deductions for itemized expenses, credits for child and dependent care, or education-related tax credits.
By taking advantage of these incentives, you can decrease your taxable income and maximize your refund amount. To make sure that you’re not missing out on any potential savings, it’s important to stay up-to-date on the latest tax changes. Additionally, a tax professional can help you identify additional deductions and credits that you may be eligible for.
6. Making Incorrect Calculations of Withholding Taxes
When you are employed and receive a paycheck from your employer, they will usually withhold taxes for the year. The amount withheld is based on withholding tables published by the IRS. To make sure that you’re paying enough in taxes, it’s important to review and adjust the amount of withholding taxes if necessary. If there were changes to your income or tax deductions, filing an updated W-4 form with your employer is a good way to update your withholding amounts.
Failing to pay enough taxes can result in owing money to the IRS when you file your taxes or having to pay a penalty for underpayment. Additionally, if you are paying too much in taxes, you may be eligible for a refund. It’s important to review your withholding taxes throughout the year and make any necessary changes to avoid owing taxes or missing out on a refund.
7. Failing to Sign and Date Your Return Form Correctly
Signing tax documents correctly is an important step when filing your taxes. If you don’t sign the forms, they will be rejected by the IRS and you won’t be able to file your return. Additionally, you need to make sure that you are signing in the correct place and that all signatures have been included.
8. Neglecting to Update Bank Account Details
If you are expecting a refund, it’s important to make sure that all of your bank account information is up-to-date. Failing to update the information could mean that your refund won’t be deposited into the correct account and could significantly delay your return. Additionally, if you owe taxes, providing incorrect banking details can result in late payment fees and other penalties.
Are You Avoiding All These Errors in Filing Taxes?
Filing taxes can be a tricky process, and it’s important to make sure that you are avoiding all the errors in filing taxes. From updating your W-4 form with your employer to making sure all bank account details are accurate, there is much more than meets the eye when preparing for tax season.
If you want some extra help or advice on how to avoid these common mistakes, visit our website for more useful articles and resources!