You may incur penalties for making mistakes when filing your taxes, such as missing out on a larger refund than you claimed, end up owing more in taxes (in addition to interest and penalties), or even invite an IRS audit. Really, the best way to tackle such situations is to avoid making mistakes on your tax return in the first place.
In case you’re wondering what some of these mistakes could be, we decided to put together this piece with some of the most common mistakes people make when filing their taxes. Take a look.
Blowing the Basics
Many people tend to botch their tax returns from the very start by entering names with incorrect spellings or incorrect Social Security numbers. Some also select the wrong filing status.
Entering Information Incorrectly
You need to be extra careful when entering wages, bank interest, dividends, and other income because they must be entered as they were reported to you on an information return.
Entering Items on the Incorrect Line
You need to make sure that you enter all items where they’re intended. For example, you cannot use the line intended for taxable IRA distributions to enter your tax-free IRA rollover.
Relying on the Standard Deduction
You may end up costing yourself some money by choosing to take the standard deduction in order to avoid the time and effort that comes with itemizing. That said, under the Tax Cuts and Jobs Act, the standard deduction has nearly doubled, meaning you’re more likely to save money choosing the standard deduction than itemizing.
Not Take the Write-Offs You’re Entitled to
As long as you meet the tax law requirements for a deduction, you should take it. Some people tend to avoid taking deductions because they believe it’ll invite an audit. For example, you can take a home office deduction if you are self-employed.
Using the Minus Symbol for Negative Numbers
If you’re entering items as negative numbers, make sure to use brackets, not the minus symbol. Using the minus symbol may cause the computers at the IRS to read the information incorrectly.
Not Telling the IRS How to Handle the Refund
If you overpaid your taxes and are due a refund, make sure to let the government know what you want them to do. If you fail to do this, the US Treasury will send you a check. But if you wish to receive your refund faster, include your bank account information and routing number, so the government can deposit the amount in your account directly.
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