Top 7 Filing Mistakes to Avoid This Year
April 03, 2020 in Tax Facts, Tax Info, Tax Planning, Tax Tips & Tricks
Now that Tax Day 2020 has been postponed until July 15th, you have a little more time to do your taxes if you need it. This also means you have a little more time before the tax filing deadline to double-check your return and make sure you don’t make a tax filing mistake. An error on your tax return could cause you to miss out on a larger refund or owe more in taxes. Or, worse, it could result in an audit. Want to make sure you don’t make a common error on your tax return in 2020? Read on to learn the top 7 filing mistakes you should avoid this year.
1. Wrong Address
It’s important that you put the correct address on your tax return. If you opt to get your tax refund by mail, rather than by direct deposit, a wrong address on file could result in your return being mailed to someone else. Then, a wrong address could also cause you to miss important mail from the IRS. So be sure to check that your mailing address with the IRS is correct, especially if you’ve moved within the last year.
2. Math Errors
Math mistakes are very common on tax forms that have been done manually on a paper return (rather than by tax preparation software, which generally does the math for you). Math errors on returns can be made on more complex calculations, but they can also be the result of simple errors, like incorrect addition or subtraction. With that said, if you prepare your return manually, be sure to double check your math in order to avoid any costly errors.
3. Failure to Sign
Failing to sign a tax return is a simple and common tax filing mistake to make, but an important one to avoid, since unsigned tax returns are not valid. Note that if you’re married and file a joint return, generally, both parties need to sign your return for it to be valid.
4. Incorrect Bank Account Information
Getting your tax refund by direct deposit? Make sure you double check the bank routing number and bank account number on your tax return before you send it. If you miss a digit, this could delay your refund, since your return should be automatically flagged as having an error, the same way it would if you missed a digit in your social security number. If you put a wrong digit, you may have accidentally put someone down someone else’s bank information, which could make it challenging or impossible to retrieve your return.
5. Failure to Report Income
Most people know that they need to report income if they receive a W-2 or a 1099 for that income. However, you must report all income on your income tax return, even if you didn’t receive a tax form for it. For example, if a company paid you $300 in total for freelance work in a given tax year, they may not send you a 1099 form, since you didn’t make over the $600 mandatory threshold for sending the form. However, you’re still required to report that $300 to the IRS and you’re still required to pay the appropriate state and federal taxes on it.
To make sure you report all your income to the IRS, keep good records of all the money you earn, especially if your income comes from many sources. Failing to report income, no matter how small, is a big deal in the eyes of the IRS.
6. Incorrect Filing Status
It’s very common for those who were recently married or divorced to forget to change their filing status. And it’s even common for filers with no change in marital status to put the wrong filing status on their return, since some people may be confused about which filing status they should use. There are five possible filing statuses: single, married filing jointly, married filing separately, head of household, and qualifying widow(er) with dependent child. If you’re unsure which of these statuses you should use when filing your income tax return, you can use the IRS’s What’s My Filing Status Tool to find out. It’s important to make sure you put the right filing status on your return, since this can affect your standard deduction amount, your filing requirements, and the tax credits you’re eligible for, your tax bracket, your tax bill, and more.
7. Incorrect Tax Credits or Tax Deductions
Failing to correctly claim credits or deductions can hurt you in one of two ways. If you miss valuable credits or deductions that you qualify for this tax season, you could end up overpaying on your taxes or missing out on a bigger refund. Then, if you claim credits or deductions that you don’t qualify for, this could get you in trouble with the IRS (especially if they think you did this on purpose). To make sure you claim the credits and deductions you’re eligible for, and only those credits and deductions, be sure to double check any tax benefits you claim. Also, make sure to double check your claim or deduction calculations. If you’re worried that you aren’t making the right claims or deductions, remember that you can always seek out help from a qualified tax professional who can correctly prepare your tax return for you.