How To Sidestep Common Income Tax Return Boo-boos
Its human nature to commit mistakes. In fact, making and learning from mistakes is the very thing that makes us successful.
And when it comes to making mistakes on tax returns, mistakes can be costly.
Outlined below are the most pedestrian IRS Tax mistakes according to the IRS. If you can check and double-check the items below, you would have eliminated about 80% of potential error outright in your tax forms.
Inaccurate Filing Status Claim: Take note that your filing status points to the tax benefits you will receive. For example, the child tax credit, earned income tax credit and dependent exemptions. The choices for filing status choices include single, married filing jointly, married filing separately, head of household, and qualified widow with dependent child. Make sure you pick one that best describes your actual status. You can't just pick one; each has requirements. If youre not sure consult an expert.
Wrong Social Security Numbers: Giving the wrong social security number can happen and if these are incorrect, a search on the tax database won't match your government records, which will compel the IRS to prohibit exemptions, credits and deductions.
Not Signing and Dating Your Tax Return Form: If you forget to sign, the IRS wont consider the tax return form officially filed. A much simpler solution ot this is to use online e-filed returns, which can be electronically signed. You or your tax preparer can simply use a security PIN number to complete the filing process.
Making Claims for Ineligible Dependents: You have to make sure they qualify. One barrier to your claiming for this will be if they don't have Social Security numbers, which are grounds for the IRS to disqualify the exemption.
Abusing or Not Claiming the Earned Income Tax Credit: Not surprisingly, millions of low-income working families qualify for a tax credit, but do not move to make a claim for a variety of reasons. Take note that even if you don't make enough money to be required to file a tax return, you may or are still be eligible for the credit. This is important so take heed. Because this claiming this return is a refundable credit, it often means extra money back from the IRS. To make sure, check the requirements for this tax credit because some taxpayers do not qualify for it.
Not Reporting Domestic Help: Taxpayers usually do this to avoid paying Social Security and Medicare taxes for their workers, and this is against the law.
Not Reporting Full Income For The Year: Full income means all of it. This means every source of income, every penny you earn even if you don't get a W-2 back from an employer, or a 1099 form from someone else you did work for.
Not Checking Eligibility To Alternative Minimum Tax (AMT): If in your calculations, your deductions and taxes are so high as to zero out much of your tax liability, chances are you may be subject to AMT, a different tax system designed to make sure the wealthy pay their fair share. But nowadays not only the rich fall under AMT. More and more middle income taxpayers are being charged by this tax. It's best to check with your expert.
Bad Calculations: Arithmetic mistakes in calculating your taxable income, tax amount, deductions, capital gains, credits or money you owe or are due as a refund.
Not Filing The Correct Forms: IRS directions are clear who has to file which form. See "Which form should I use" in IRS Publication 17, "Your Federal Income Tax." Supporting documents and schedules must be filed for certain deductions, credits and other items.
Not Filing Self-Employment Tax. If you are self-employed, in most cases you need to file Schedule SE, "Self-Employment Tax."
by: Huey Harden
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