Filing tax returns is not as easy as it sounds because there are several pitfalls and surprises that you may encounter. The IRS states that taxpayers make some common errors while filing returns. Even while these errors may be unintentional, they can still get you in trouble. Surprisingly, most of them are easily avoidable if you are aware and ready to be a little extra careful while filing. A majority of them can be avoided by filling e-returns while there are some that may happen even if you file electronically. Here are some common mistakes that you should avoid while filing returns.
Mistake #1: Choosing the incorrect filing status
Perhaps the most common mistake that filers make is choosing the wrong filing status. Doing it correctly is critical because filing status determines your filing requirements, credit eligibility, and deductions. Incorrect status gets the entire return wrong, which spells big trouble. Whether you file on paper or online, make sure that you tick the right filing status.
Mistake #2: Not listing the names correctly
Another mistake that people make is listing the names incorrectly. Besides your own name, you also need to list the name of your spouse and dependents in the return. Double-check and make sure that all the names are spelled correctly. They should also match the names and spelling on their Social Security cards. Unless you have the names right, your return may get rejected.
Mistake #3: Making mathematical errors
You may be surprised to know that even mathematical errors can cause trouble for your tax return. Such errors are common for returns prepared without using tax software. The best way to handle the concern is by using software because it handles the calculations and ensures that you get them right. If you are doing it manually, do check the calculations several times before filing.
Mistake #4: Forgetting to sign your return
Forgetting to sign your return can possibly hold it up for weeks. If you are filing a joint return with your spouse, be sure that both of you sign it. On failing to do so, you may get the document back for a signature. To make things worse, you may even face a late filing penalty if it gets delayed beyond the due date. For e-returns, you need to add digital signatures before transmitting the return to the IRS.
Mistake #5: Not seeking professional advice for complex returns
Even though you may want to save up by filing your return yourself, you must seek professional advice if your case is complex or you lack enough knowledge. For example, you should consult an expert tax attorney if you have inherited a property in a specific year. Similarly, do check with a professional if there are some discrepancies in your business accounts in a financial year. You would not want to be penalized by the IRS and a lawyer can help in this context.
Mistake # 6: Illegible tax return
Another common yet easily avoidable mistake with return filing is illegibility of the returns. Obviously, this happens with paper returns when the IRS is unable to read any of the key parameters such as your name, address, ID number and more. The problem is easy and its resolution is simple. Just opt for e-filing rather than paper filing and you will not make this error!
Mistake #7: Not claiming deductions you are entitled to
Some taxpayers simply fail to claim deductions they are entitled to because they fear that the IRS would see it as a red flag. For example, people often think that claiming a home office deduction can get them a tax audit. However, this notion is incorrect because you can avail a deduction as long as you meet the tax law requirements. And if you are still in doubt, you can consult an attorney for the right advice.
Mistake #8: Failing to attach the requisite documents
When you file your return, there are certain documents that you need to attach along with. Failing to do so can cause problems and even result in a delayed refund. Do run through the document checklist and ensure that you have all of them attached with the return. Attaching them in the correct sequential order is equally important.
Avoiding these common mistakes can make the return filing process completely hassle-free for you. Therefore, you need to pay attention while filling all the details in the return whether you choose to file on paper or electronically. Taking professional assistance is a smart move if you want to make your return completely error-free.