The 9 most common tax filing mistakes and how to avoid them.
With tax submissions and filing deadline drawing close, you may be tempted to rush in your returns but you can wait some time. The tendency of making mistakes when rushing could be high and in turn, those errors will slow down the processing of your tax returns. This can result in delayed tax returns or in some cases, a stricter look from internal revenue service (IRS).
The following are the most common errors identified in tax forms by the IRS. They are as follows:
- Wrong or missing social security numbers: A lot people fill in wrong SSN number especially for their kids. I’m as guilty as most people too. Ensure you fill in the correct numbers and double-check them against the social security cards.
- Wrong names: You would be surprised to know that a lot of taxpayers misspell the names of their spouse or dependents. Always make sure that the names on the tax returns should match the names as shown on the social security card. In some cases, the social security administration (SSA) may get the names wrong ( a particular case had the spouse’s name written backward on the card). It could also be an error on the card meaning that even when you write the correct name on your tax returns, it conflicts with information in the IRS system. The best solution is to write the names as they appear on the social security card. For any name change, you’ll have to contact social security administration.
- Filing status errors: On the form, there are five statuses to choose from: single, married filing jointly, married filing separately, head of household and qualifying widow(er) with dependent child. It’s important to select the one that’s most appropriate for you.
- Math mistakes: The IRS is very conscious of math on your tax returns. For paper tax filing, it’s very easy to miss numbers so it’s essential to double check. Make sure the figures on the first two pages of your tax return add up correctly. Using a tax professional or software simplifies the process so you won’t have to do the math on your own. This is preferred by most people.
- Errors in figuring tax credits or deductions: Usually, there are credits and deductions available to be claimed and could be overwhelming as well as confusing. At times, the credit or deduction may appear when in fact, you have been restricted from making the claim or it’s phased out due to your income. It’s possible you’ve already claimed the tuition and fees for the same expenses which you want to apply to the American Opportunity Tax Credit. You could also be disallowed from claiming specific tax breaks in your filing status. Like filing as married and filing separately will disqualify you from some tax breaks. It’s better to read the instructions on the form or ask a tax professional if you are not sure about a credit or deduction.
- Incorrect bank account numbers: A faster way of getting a refund for your tax returns is if you submit electronically and use direct deposit. It’s a fast, easy and stress-free way of filing if you fill in the right information. Ensure your bank routing and account numbers are filled correctly. If you’re not sure of any, ask your bank.
- Forms not signed: You’ll be surprised at the number of tax returns not signed. In the rush to file, most people forget to sign – a common mistake noticed by IRS every year. An unsigned tax return is seen as an invalid return. It is only when the return is signed and submitted that it’s considered timely filed. Note that for a joint return to be valid, both spouses must sign the return.
- Electronic filing PIN errors: E-filing requires a signature in the form of a personal identification number (PIN). You will be asked to pick a PIN on your electronic file. If you e-filed last year, you can use the same PIN. Please note that your e-filing PIN is different from an IP PIN so don’t confuse both to mean the same thing. You can get more information on IP PIN here.
- Health care reporting errors: A lot of health care reporting on the tax return can cause a high possibility of errors. The most common error according to IRS is failing to claim a coverage exemption and not reconciling advance payments of the premium tax credit. Previously, it’s been a guessing game figuring out the advance credits based on estimated income and personal exemptions. Lots of taxpayers are getting it wrong in this regard.
With all the common mistakes made on tax returns like stated above, the following are tips to avoid making them.
- Ensure you plan ahead. It’s always good to have the right information available before you get your tax return. This way, errors and mistakes are reduced or eliminated completely. Information like social security numbers for your spouse and dependents including last year’s tax returns should be kept handy.
- Don’t rush. Most mistakes occur when taxpayers are rushing to get the returns filled and filed. If you think you need more time, you can request for an automatic extension. Of course, it’s better to file a complete and correct tax return than an error-filled, sloppy return by April 18.
- Read the instructions. If you are unsure about how to fill and what to fill, it’s better to read the instructions. There are IRS publications that can help.
- Be neat.No matter how sure you are of your filing, ensure it’s neat and legible. If the IRS representative can’t read your return, you’ll have a delay in processing.
- Cross-check your work. After you’ve completed filling your tax return, slowly go over everything again. By doing this, you’ll be able to see possible errors and correct them. If after filing you find out that you’ve made some mistakes, don’t freak out. Just find out how you can file an amended return.