Tax laws are complicated and have a tendency to change often. But surprisingly, most errors made on tax returns are simple. Filing your taxes electronically can avoid many of the most common mistakes. With the advanced tax software available, the math is done for you, common mistakes are flagged, and you’ll get a little help with additional deductions and tax credits.
Here are 7 mistakes that can cost you when filing your tax returns.
Filing too early
Everyone knows you shouldn’t file your taxes late. But if you file too early you run the risk of missing some of your tax documents. Employers have until January 31st to send out their W2s and 1099s. So you should give the postal service some time to get those documents to you before you jump the gun and begin your tax filing process. Not having all of your documents could cost you money and time.
Inaccurate or missing information
When filling out your tax documents, it’s easy to input the information incorrectly, including misspelling your name, entering the incorrect social security numbers, or filling in your wages, interest, etc. Your name and social security number should match what’s on your social security card. And take your time filling in the numbers. Using the interactive tax assistant through IRS.gov would help point out errors and flag when information doesn’t match or is missing.
Incorrect filing status
Your filing status is usually determined by your marital status on December 31st. But many people make mistakes when it’s not so cut and dry. If you’re not sure of your filing status, it might be a good idea to seek professional help from a reputable tax professional to clear things up. Using tax software can also help determine your status by asking a handful of questions.
Math can be complicated, that’s true. But many of the most common math mistakes people make on their tax forms are simple, easy-to-miss mistakes. A simple missed addition or subtraction can derail your tax forms. Even if you’re great at math, it’s easy to miss some of these calculations. Tax software does the calculating for you so you know you haven’t missed any simple subtraction problems.
Tax credits and deductions
Honestly, figuring out your credits and deductions can give anyone a headache. Taxpayers can make mistakes figuring out if they qualify for earned income tax credit, child and dependent care credit, child tax credit, and recovery rebate credit, just to name a few. This is the ideal situation for using the interactive tax assistant through IRS.gov.
Incorrect bank account information
You’ll get a refund much easier and faster if you share your bank account information and sign up for direct deposit. But make sure you enter your banking information carefully. If you make a mistake and input the wrong routing or account number, you could delay your return for weeks or even months.
Forgetting to sign your forms
Your tax return isn’t valid unless it’s signed by all parties. For married couples, both spouses must sign. There are some exceptions for active-duty military if their spouse holds a power of attorney. But for most people, your tax forms must be signed. Forgetting this step will set your return back by months. Or worse, you’ll have to refile your tax forms. Using the online tax assistant will prevent this from happening. Once you’ve finished filling out your forms, the electronic assistant will have you sign your documents electronically and send them directly to the IRS as soon as you’re done.
Mistakes will always happen, especially when it comes to filing your taxes. There are so many boxes that need to be filled in and making just one tiny mistake could cost you time and money. The best option is to have a professional help you prepare your taxes. Many taxpayers also qualify for free tax return preparation from IRS-volunteers.
But if you want to do it on your own, the IRS recommends filing electronically and opting for direct deposit for the quickest returns. IRS Free File is a great option and will make sure that you don’t make any of these costly mistakes.