How confident are you with filing tax returns? 80% of people make tax return filing errors every year, which can affect their refund. And there can be more severe consequences depending on the error.
Filing tax returns can be overwhelming. However, avoid the temptation to rush through any complexities, as mistakes could negatively impact you in the future. So, how can you avoid tax return filing errors?
The best way to avoid errors is to be aware of common tax filing mistakes. Here are the top six tax return filing errors to know and avoid.
1. Not Keeping Records
One of the biggest mistakes you can make is not keeping track of finances during the year. It means you will have to make some guesses when completing your income tax return, which could lead to issues with the IRS.
Be sure to provide all necessary tax return forms, such as 1099 forms and W-2’s. You may also need to submit other documents, such as K-1 statements. If you do not correctly submit tax return forms, you may have to go through a paper audit with the IRS.
2. Under-Reporting Income
Whatever the reason for under-reporting income, avoid this error. It can suggest dishonesty and lead to further investigations. There are many ways to ensure accurate income reporting, including using online software of a tax attorney, such as Delia Law.
3. Missing Tax Return Deadlines
You have to complete your income tax return by the deadline, which is usually April 15th in the US. There are no exceptions unless you file a petition for an extension. You will have to pay a fine if you miss the deadline.
4. Claiming Too Many Deductions
Tax deductions can help reduce how much tax you owe or your tax liability each year. But only if they are correct deductions. Be sure to only claim deductions you qualify for, and provide the proper documentation for evidence.
5. Incorrect Tax Return Forms
Take the time to fill in tax return forms correctly; it is not something to leave until the last minute. If you miss important information or incorrectly fill it in, you can experience delays with your tax return. Also, make sure you fill in the right tax return forms, as sometimes people fill in the wrong form, which causes long processing delays.
6. Not Reporting Other Sources of Income
Make sure you report all income earned in the year. Income includes any international assets, earnings, freelance work, tips, winnings, and other sources of income. If you fail to report your full income, you may be subject to penalties and extra fees.
Avoid Tax Return Filing Errors
If you know the common tax return filing errors, you are less likely to make the same mistakes. There is a lot of guidance and software available to make it easy to manage your taxes correctly. You can also consider hiring financial support to help manage your taxes.
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