Filing your tax returns correctly is an important step in avoiding penalties and even criminal charges from the IRS. But the process can certainly feel confusing, especially if you have several sources of income and a range of deductions to keep track of.
Understanding a few of the common tax filing mistakes to avoid can help you focus on preventing these errors.
Missing the annual tax filing deadline is one of the more common mistakes taxpayers make. The beginning of the calendar year can be busy, and the April 15th deadline may easily sneak up on you. But failing to file by this deadline can lead to penalties based on the amount of unpaid taxes and how late you file.
Marking your calendar and setting a reminder on your phone can help prevent you from forgetting this deadline. If you need extra time to file, apply for an extension rather than missing the deadline and facing penalties.
If your employer does not automatically withhold taxes from your paycheck, you may be required to pay quarterly estimated taxes. This often applies to freelancers, self-employed business owners, and those who receive income from investments. Failing to make quarterly payments is another common tax filing mistake to avoid that can leave you with penalties.
You can calculate your estimated quarterly taxes through IRS Form 1040-ES and make payments through the Electronic Federal Tax Payment System.
Selecting the right filing status is one of the first steps in filing your tax returns. Filing status errors can lead you to pay more taxes than you otherwise would and can lead to penalties.
The IRS recognizes five filing statuses:
Some people may hold more than one status. Speak with a tax professional about which status to claim based on your situation.
Math calculation mistakes are also common tax filing mistakes to avoid. Filing your tax returns manually requires you to calculate figures like your total income, tax liability, and more.
When you make math errors, the IRS will send you a notice of the error and either request an additional tax payment or inform you of an increase to your refund. However, it’s better to correct math errors before they occur to prevent delays to your refund. Tax software will automatically calculate figures based on the information you enter, preventing errors.
Other types of inaccuracies are also common on tax returns and can delay your refund. Examples include:
It’s generally a good idea to double-check all information in your tax forms before submitting them to ensure accuracy, even if you used tax filing software or had a tax professional fill out the forms for you.
Making errors in tax returns is easy to do, but even if mistakes are accidental, they can lead to fines and other penalties. Working with an experienced tax professional can help you avoid errors and maximize your savings, taking the stress out of tax season.
Levy & Associates, Inc., helps taxpayers understand common tax filing mistakes to avoid and provides trusted assistance with tax filing. Our team consists of tax attorneys, CPAs, former IRS officers, and other professionals who can help you gain peace of mind. Contact us today at 800-829-5389 or fill out our contact form to request a consultation.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.