🎧 Listen to This Article
Filing taxes can often feel overwhelming, with a flurry of questions buzzing in your mind: Am I completing my return correctly? Have I used the appropriate forms? Am I overlooking something important?
The good news is that the IRS understands the complexities of tax laws and acknowledges that many of the most frequent errors taxpayers make are quite simple. Mistakes such as an incorrect Social Security number or forgetting to sign your tax return can lead to frustrating delays in receiving your refund.
Even more concerning, failing to claim all the credits and deductions available to you might mean leaving money on the table or even paying more tax than necessary. To help you navigate your tax season successfully, we’ve compiled a list of eight common tax mistakes to steer clear of — along with tips on how to fix or prevent them.
1. Not Claiming All Eligible Credits and Deductions
Credits
Depending on your adjusted gross income (AGI) or modified adjusted gross income (MAGI), you may qualify for several valuable credits. Be sure to explore these popular options:
- Child Tax Credit
- Education Credits, such as the American Opportunity Tax Credit and Lifetime Learning Credit
- Earned Income Tax Credit
- Retirement Savings Contributions Credit
Deductions
Ensure you’re accurately claiming all of your dependents. At tax time, a dependent is defined as someone, apart from you or your spouse, for whom you have paid more than 50% of their household expenses for over six months in the previous year.
Additionally, remember to account for charitable contributions when itemizing deductions. The IRS provides specific guidelines regarding what qualifies as a deductible contribution, so doing your homework is crucial.
You can also deduct losses from investments, up to $3,000 in capital losses each year from ordinary income; for married individuals filing separately, the limit is $1,500. Any excess losses can be carried over into the following tax year.
2. Overlooking Tax Considerations as a Service Member
If you are a member of the military, certain tax privileges and considerations may apply to you. For example, your earnings could be partially or entirely exempt from federal taxation while deployed to a designated combat zone.
Make sure to familiarize yourself with other military family tax benefits, including special rules regarding the sale of your primary residence while on extended duty and deductions for overnight travel expenses for National Guard and reserve members.
3. Failing to Organize Paperwork
Keeping your tax paperwork organized throughout the year can make filing much simpler. Standard employee forms, such as W-2s and 1099s, will typically arrive at the beginning of tax season, but you are responsible for documenting other expenses such as charitable contributions, home office costs, or vehicle mileage.
Establish a systematic approach to storing receipts—consider using folders, envelopes, or digital apps—to simplify the process, especially if you plan to itemize deductions.
4. Neglecting to Review Tax Forms for Errors
It’s common to make mistakes, but errors on your tax return can be costly. The IRS indicates that the error rate for paper returns is 21%, while e-filed returns boast an error rate of less than 1%.
To minimize mistakes, it’s advisable to file electronically. Tax software simplifies calculations, flags potential mistakes, and prompts you for any missing details. If you prefer traditional paper filing, take the time to review your forms thoroughly.
5. Missing Filing Deadlines or Not Filing at All
Submitting your tax return too early can lead to missing important information, whereas waiting too long can result in penalties. Familiarize yourself with deadlines and make sure to file your return on time to avoid unnecessary complications.
By avoiding these common tax pitfalls and being proactive in preparing for your tax filing, you can not only simplify the process but also potentially increase your tax refund.
For personalized advice suited to your situation, consider consulting a tax professional.
For further details, clarification, contributions or any concerns regarding this article, please feel free to reach out to us at [email protected]. We value your feedback and are committed to providing accurate and timely information. Please note that all inquiries will be handled in accordance with our privacy policy
