Now that the new year has come and gone, one of the next big days sure to hit your calendar is April 15 – the deadline for filing your federal income taxes.
But while you may file your necessary forms on time, any tax refund could be delayed if you fall victim to any of the common mistakes people make when filing their taxes. Misspelled names, mathematical errors, or even one wrong digit in a Social Security number can lead to big delays for a small mistake.
If you’re claiming the Earned Income Tax Credit, take the time to make sure you’re eligible. It’s one of the IRS’s most-audited tax provisions, as many people who claim the credit end up not qualifying. It’s a valuable credit, but so many people have gotten this one wrong that professional tax preparers are required to file Form 8867 to show a taxpayer’s eligibility.
Make sure to accurately input every significant number on your return. For instance, make sure to enter your Social Security number exactly as it appears on your card. Verify your bank account and routing numbers if you’ll be receiving any refund via direct deposit, too.
But while some numerical errors can be a careless mistake, double-check your adjusted gross income (AGI) to make sure you don’t make a costly mathematical error. Electronic filers are in luck: the software will typically check the math for you. Also, electronic filers verify their identities by entering the AGI they submitted the prior year. But don’t use an AGI figure from a return that’s been amended, or a Form 1040X.
Taxpayers should also take the extra time to ensure that all names are spelled correctly. It may be a bit of a rush if you procrastinate until April 14 at 11:30 pm, but spell checking can prevent delays. Just use the names as they appear on Social Security cards.
A common tax time mistake is using the wrong forms. The computer networks used by the IRS are pretty top-notch and can detect when the wrong form is used (for instance, filing employee business expenses with a Schedule A but not attaching Form 2106). Do your homework and use the right forms. It’ll also help avoid the red flags that lead to IRS audits.
Filing a mistaken tax return doesn’t help a financial situation, but filing a return that omits income and over reports deductions can lead to back tax judgements by the IRS. IRS agents can easily access your record of bank deposits, and that can give them the all the ammo needed to go after you for back taxes.
By working with a tax professional, you can make sure your tax returns are filed correctly and help prevent the situations that lead to back taxes and possibly reduce the amount owed in additional penalties and interest.