How to avoid tax mistakes : These seven common tax mistakes can prevent you from getting your refund promptly.
As we enter tax season 2023, we’re in the thick of it. The IRS has already refunded about 42 million tax filers, and a few weeks remain for the remaining taxpayers to file.
As the tax deadline of April 18 draws closer, the stress of filing can sometimes lead to mistakes. In haste, you can make mistakes that result in your tax return being rejected or your tax refund being delayed for a long time.
Here is a list of common tax return errors you should avoid if you want to receive your full refund on time. Your tax return can be rejected, but if you’ve filed on time and made a mistake, you’ll have five days to correct it and resubmit it.
Savings accounts online for March 2023
The most common mistakes people make when filing taxes can be avoided by reading on. Find out how to file your taxes for free and how to claim the child tax credit for more tax tips.
Filing a late tax return is mistake No. 1
It is estimated that about 20% of taxpayers wait until the week before the deadline to file their income tax returns. When you owe the IRS money, that’s not necessarily a bad tactic, but when you are about to get a refund, that’s dangerous.
Procrastinating on your taxes leaves little room for error, and not filing your return on time significantly complicates the refund process. The IRS will charge you a late filing fee if you owe them money, and other penalties will begin to accrue.
In order to file a six-month extension, you’ll need to pay estimated taxes owed and you’ll lose money if you expect a refund.
Misspelling names or entering incorrect Social Security numbers is mistake No. 2
It may seem ridiculous, but this mistake happens more often than you might think. The name and number on your Social Security card should be entered exactly as they appear on the card. In the event that either of them are not exactly the same, your tax return is likely to be rejected.
In the event that your legal name has changed, you’ll need to update your Social Security number first, and then file your taxes under your new name.
3rd mistake: Entering last year’s AGI incorrectly
For tax returns filed electronically, the IRS uses your adjusted gross income from the previous year to verify your identity. Hence, in order to file your 2022 taxes online, you must use your exact AGI from the tax return for 2021. Tax returns that don’t match last year’s AGI will be rejected, and you will have to file again.
In case you lost your tax return from last year, you can find out your AGI from 2021 by requesting an instant transcript from the IRS, though you’ll need to create a free online account first. When filing your taxes this year, if you did not file any last year, you should enter $0 for your 2021 AGI.
4th mistake: Using an incorrect filing status
Individual US taxpayers can file their tax returns in one of four ways: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) with Dependent Child. Depending on your filing status, you may be eligible for a standard deduction, tax credits, and overall tax burden.
What Is My Filing Status? by the IRS? This tool helps you determine your own situation and make a selection that is appropriate for you. The IRS may suspect tax fraud and begin an investigation if your filing status is incorrect. At worst, you might need to file an amended return with Form 1040-X.
Mistake No. 5: Making math errors with credits or deductions
Child tax credit, earned income tax credit, mortgage interest deduction, child care deduction — the worksheets and rules for many such tax items can be tricky to calculate on your own. A mistyped number or wrong calculation can result in an inaccurate tax refund, meaning you’re either losing possible money or will have to pay an overage back with fees and penalties.
Quality tax software will nearly eliminate these sorts of errors, collecting and calculating all of the numbers you need to file your taxes correctly. All the top tax products offer accuracy guarantees that will pay for any losses or penalties if their software makes calculation errors. You’ll still need to enter correct information in order for tax software to work successfully, so be sure to double-check all your numbers before filing.
If you prefer to do your taxes yourself the old-fashioned way, the IRS’ Interactive Tax Assistant can help with a wide range of credit and deduction calculations.
