Tax laws may not be the same every year. They may change and making mistakes during tax filing could cost you money, or lead to tax fraud. To file error-free tax returns, you need to be up to date with any changes happening each year. Some common mistakes are more likely to prompt an audit or delay a return. Organizing and maintaining paper tax records is another strenuous task for tax payers. The best option for efficient management is to digitize those records and store them in electronic format. Take support from experienced business process outsourcing company providing reliable data conversion services.
Here are some common tax filing mistakes and tips to avoid them –
- Incorrect details or missing information
This is the most common mistake when filing taxes. We may fail to include any crucial data or fill out details in the wrong field, use the wrong spelling, or write incorrect Social Security Number, fail to fill in the right boxes, not include various deductions, credits, and allowances etc. Any such errors could cost you money or may lead to tax penalties.
Ensure that your name or your dependents’ names are spelled correctly and the Social Security numbers entered are correct. Importing and referring to the previous year’s returns is another way to reduce any manual errors when keying in information. Enter wages, dividends, bank interest, and other income carefully.
- Missing the deadline
Not filing returns on time is another common mistake that people may make. Missing the payment deadline or not making the payments by the due date will result in the IRS charging interest. Waiting until the last day of filing is quite risky. This could also lead to making more errors and facing penalties.
Stay updated with the recent tax filing date and start filing your tax returns days before the tax filing deadline to avoid costly errors.
- Not aware of the tax updates
Each year, IRS makes various minor or major amendments and complying with the same is a necessity. Not staying updated with the latest tax news can result in extra costs.
Make sure to consult the IRS website’s news page for important updates. Stay aware of the current deductions and credits.
- Not organizing records
Arranging tax documents in the incorrect order makes it difficult to recover important information from them. Digitizing all records and storing them electronically provides faster access to records. Documents are safer when stored in the cloud or drive rather than when stored as a hard copy.
Choose an experienced document scanning company to get the records scanned in a faster turnaround time.
Incorrect calculation of deductions and credits – tax deductions, charitable donations etc. could result in overpaying the IRS. Errors may occur even in simple addition and subtraction in more complex calculations.
Make sure to double-check your calculations and ensure they are right. Tax preparation software is available to speed up the process automatically.
Other key mistakes that you need to be aware of include failing to sign and date the returns, not claiming the correct deduction, not declaring exemptions correctly, choosing the incorrect filing status, sending returns to the wrong IRS office, not attaching 1099-R forms orW-2 forms, and not using Identity Protection PIN.
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