Americans can file their tax returns several months before they’re due, but about a third wait until the very last minute. Scrambling to prepare your taxes can result in a slip-up or two — which may cost you in the form of a smaller tax refund, a larger tax bill, or even a dreaded audit letter from the IRS.
The best defense against errors is avoiding them on your return in the first place (and, when possible, preparing for tax season ahead of time). Returns for the 2022 tax year are due April 18, 2023. Here are easy ways to avoid some of the biggest tax mistakes.
Filing a paper return
Filing a paper return isn’t a mistake, but “if your return is delayed or lost in the mail, it could be a huge headache to deal with,” said Leslie Tayne, a debt resolution attorney and personal finance expert. “It’s better to file electronically because it takes significantly less processing time.” Plus, tax software can automatically check for tax breaks and apply the latest tax laws.
Forgetting to report all your income
The IRS expects you to report any income you received during the year, whether it’s reported on a W-2 or it’s cash you received under the table. “If you file your taxes and fail to include that income, you may face interest charges and a late filing penalty” when the IRS finds out, Tayne said.
Goofing up basic information
If you somehow misspell your name or leave a digit off your Social Security number, the IRS may reject your income tax return altogether. But the agency will tell you right away and let you make it right. Keep in mind: If someone in your household doesn’t have a Social Security number, you can list an Individual Tax Identification Number (ITIN) instead.
Not using the best filing status
Your filing status affects the tax rate applied to your income and certain tax breaks you can claim, so “choosing the wrong filing status can result in a lower tax refund, a bill for additional taxes, or even an audit,” Tayne said.
If you’re unsure which status to use — single, married filing jointly, married filing separately, head of household, or qualifying widow — then consider using tax-filing software or checking out the IRS’ Interactive Tax Assistant.
Making math errors
The IRS caught more than 9 million math errors on last year’s tax returns, ranging from simple addition and subtraction issues to complex calculations gone wrong. Many of those mistakes came from crunching the numbers for the child tax credit. When preparing your taxes, it’s a good idea to double-check your math or use tax software that does the heavy lifting for you.
Providing the wrong bank information
You have the option of getting your tax refund sent to your bank account, but make sure the account number and routing number are correct. With the wrong information, the bank may reject the deposit — or, they may direct it to another person’s account.
Mailing your paper return to the wrong address
Some filers just prefer working with paper returns — but to avoid delays, you should double-check the correct mailing address. “Mailing your tax return to the wrong address could slow things down a bit, but it will be forwarded to the correct address,” Tayne said.
Forgetting to sign and date the return
It’s a small detail, so why not get it right? The IRS won’t accept a tax return that’s unsigned and not dated, which holds up the entire process. If you’re filing a joint return, make sure both spouses sign and date the return. E-filers can sign using a self-selected personal identification number (PIN).
Not making a copy of your return
Tax experts recommend keeping a copy of your tax returns for at least three years in case you get audited. After filing, make a copy of your return (or download it) and keep it in a safe place.
Needing more time
Need more time to file your tax return? No problem. File Form 4868 — by the filing deadline — to request an automatic six-month extension. This also prevents late-filing penalties. Just remember, you’ll still need to pay any taxes due by the original filing deadline—which is April 18 this year.
Kim Porter is a freelance writer and editor.
Click here for the latest economic news and economic indicators to help you in your investing decisions
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for Apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube.
Source: Read Full Article
