Tax season comes with stress, and one could make mistakes. Some of these errors could be simple, but they can cost you a lot- you may lose out on a larger refund, incur interest and penalties, or an audit could show up! To prevent situations like this, you should avoid errors on your tax returns.
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Eight Issues to watch out for as-blog-ppt.pptx
1. Tax season comes with stress, and one could make mistakes. Some of
these errors could be simple, but they can cost you a lot- you may lose
out on a larger refund, incur interest and penalties, or an audit could show
up! To prevent situations like this, you should avoid errors on your tax
returns.
EIGHT ISSUES TO WATCH OUT FOR AS YOU
PREPARE TO HAVE YOUR INCOME TAX
RETURN FILED
www.EnrolledAgent.com
2. NOT DOUBLE-CHECKING BASIC INFORMATION:
• While no one is above mistakes, you can prevent some
errors with a second look. As ridiculous as it sounds, some
taxpayers can misspell their names, spouses, and
dependents! This error could happen when they are typing
too fast. Other common mistakes related to basic
information include: omitting or including a middle initial that
doesn't reflect what's on your social security card, trying to
recall social security numbers off heart, or even forgetting
to include it on a return. Ensure you recheck all information
on your tax forms.
•
3. DISPARITY IN THE INFORMATION REPORTED TO
YOU AND THE IRS
• Wages, dividends, bank interest, and other income reported on
an information return (W-2, 1099, K-1, etc.) should be carefully
entered. These forms have also been reported to the IRS, and
the government's computers are searching for matches in the
information you reported with what they have. If you need to
dispute what was reported to you, contact the company that
made the payment (for example, your employer) and request a
corrected form.
4. MATHS OR CLERICAL ERROR:
• A math error can be a slight mistake such as subtraction or
addition on your return. However, it could be referring to more
complex errors. The IRS says math errors are among the most
common tax filing errors. Also, how you input these numbers
could cause maths errors. For instance, to input negative
numbers, some forms might use parentheses while others might
use a minus sign. Always check the IRS instructions before
imputation. Also, ensure you input whatsoever information you
have on the right line.
5. NOT TAKING MAXIMUM ADVANTAGE OF
CREDITS AND DEDUCTIONS:
• A tax credit is an amount you can deduct from a tax bill. On the other hand, a
tax deduction is an amount you can deduct from your taxable income to
reduce your tax bill. There are so many deductions and credits accessible to
taxpayers. Sadly, some taxpayers fail to utilize some tax benefits to their
advantage. Take, for example, the Home Office deduction. Some uninformed
eligible taxpayers may be reluctant to claim this deduction because they fear
it might trigger an audit. Another commonly missed tax credit is the Earned
Income Tax Credit. This tax credit is available to low and moderate-income
workers. According to the IRS, 1 in 5 eligible taxpayers does not claim this
tax credit. Consult with an IRS-licensed tax professional. They are
knowledgeable on tax credits and deductions that can reduce your tax bill.
6. SELECTING THE WRONG FILING STATUS
• There are five filing statuses: Single, married filing jointly, married
filing separately, head of household, qualifying widow(er) with
dependent child. Each filing status has its eligibility requirement. It
might be easy for some individuals to select a filing status. For some
others, it might not be straightforward since they qualify for more than
one status. Whatever the case, when you select an incorrect filing
status, you may receive a lower refund than you are entitled to, or the
IRS may flag your return. Hence, if you qualify for more than one filing
status, selecting the status that will reduce your tax bill is advisable.
•
7. ENTERING THE WRONG ACCOUNT NUMBER
• The IRS disclaims all liability for mistakes made by
taxpayers or tax preparers on errors like this. Hence,
always ensure your bank routing and account numbers
are correct when filing your return. Entering an
incorrect number could delay your refund. There are
some instances where some taxpayers lost their
refunds. Before signing and filing your return, review
your bank routing and account numbers with a fine-
tooth comb.
8. CHOOSING TO IGNORE EXTENSIONS:
• The IRS is prepared to provide an extension
grace for you. Accepting a tax extension gives
you a six-month grace period to file your returns.
Hence, if you cannot meet the deadline, filing a
Form 4868 rather than a tax return filled with
errors is preferable
9. FORGETTING TO SIGN YOUR RETURN:
• According to the IRS, regardless of whether you file
electronically or use a paper tax return, your return must be
signed to be considered valid (you "sign" those returns using a
PIN). If you have already submitted the return without a
signature, then you have not filed a valid return. If you file jointly
with your spouse, ensure both of you sign the return.
• There are many common errors during tax filing. Now that you
are informed about these errors, hoping you don't make them
this filing season.