Whether you’re lodging a tax return online or sending one through the mail, making errors on your taxes can be costly. You might forgo a bigger refund, end up owing extra, or even trigger a dreaded audit.
The best way to avoid that unpleasant fate is to identify the common mistakes and avoid making them. Below are five to keep in mind:
1. Miscalculating numbers
Filing taxes means dealing with numbers. Unfortunately, millions of people fumble the numbers and make costly mistakes on their tax returns. These range from simple addition errors to filling in the wrong number. Regardless of how they were caused, these errors ultimately result in tax return delays.
The best way to avoid those delays is to double and triple-check your numbers. In addition, consider using tax software or reaching out to tax pros who are skilled at spotting errors.
2. Choosing the wrong filing status
The most common filing statuses are single, head of household, married filing jointly, married filing separately, and qualifying widower. Each one affects your tax bracket, available tax credits, deductions, and overall taxable income in different ways. With so much riding on your filing status, choosing the wrong one can be costly.
Although it may seem simple, sometimes you can qualify for more than one status—such as being both single and the head of the household. To choose the most beneficial status, reach out to a professional tax agent who knows how they compare.
3. Overlooking tax write-offs and deductions
Some taxpayers are skeptical of taking certain deductions for fear that they may be audited. Often, these fears are overblown. It’s generally good practice to take advantage of the deductions you’re eligible for because tax agencies are unlikely to send you a friendly reminder on how you can save money.
A simple way to take advantage of eligible deductions is to use tax filing software. This is particularly helpful if your tax returns are straightforward and simple. However, if your taxes are a bit more complicated, consider reaching out to a tax accountant who can find deductions you might overlook.
4. Entering the wrong bank information
One of the more frustrating mistakes taxpayers commonly make is entering the wrong routing or account numbers. Unfortunately, this usually leads to delays in receiving your tax refund. For example, if the routing info you provide can’t be validated, then your tax agency will likely send you a paper check, which takes longer to receive and process. If the routing info isn’t yours but corresponds to another account, they may send the refund to a stranger. Getting it back will require contacting your bank and waiting for them to work through their process.
To sidestep those unpleasant complications, it’s wise to fill out your info, take a break to rest your eyes, and then come back to check it.
5. Filing too early
Many taxpayers are eager to file their tax returns early to secure a quick refund. Although that may work sometimes, it comes with some risks. For example, if you file before you have all the documents you need, that’ll cause more headaches than it saves. Some companies send out their tax forms late; some new investment accounts require a bit of extra paperwork. Fail to wait, and you could land in trouble.
Whatever your specifics, hit the brakes and ensure you have all the necessary documentation before going forward with filing.
When tax season rolls around, keep the above five tips in mind to reduce how much you owe, boost how much you get back, and stay calm all throughout.
Photo by Olga DeLawrence on Unsplash
