Common Tax Time Mistakes to Avoid

Hands breaking pencil over tax forms“And they’re off!” If you’ve ever been to a horse race, the phrase should sound familiar. Those words apply now: the rush to file a complete and accurate tax return on time has begun.

But, as The Muse warns, the more you rush, tax pros say, the more you’re likely to make mistakes that can cost you in the form of penalties, a delay in getting your refund, and even a higher risk of an audit. Avoiding the following seven mistakes will contribute to keeping your return error free.

1. Math Miscalculations

As BankRate notes, the most common error on tax returns, year after year, is bad math. Mistakes in arithmetic or in transferring figures from one schedule to another will get you an immediate correction notice. Math mistakes also can reduce your tax refund or result in you owing more than you thought.

Using a tax-software program to file your return can help reduce math errors. But you still have to make sure your initial numbers are correct.

In addition, The Muse notes the following three points about overlooking income, forgetting to double-check information, and failing to itemize deductions.

2. Overlooking Income

The IRS requires you to claim all income, regardless of whether or not you received a W-2 or 1099 from an employer. Failing to disclose income is a common issue for last-minute filers—and an oversight the IRS is keen to uncover. And once the IRS realizes you owe more, you’ll be on the hook for the extra tax, plus penalties and interest. So even if you only worked a side job for a day, the income you received is still taxable, and you must claim it on your return.

3. Forgetting to Double-Check Numbers and Signatures

One of the most common tax mistakes, according to the IRS, is an incorrect Social Security number, so make it a point to check that you haven’t accidentally transposed the digits. And if you’ve opted for a direct deposit refund, you should also make sure that your bank account information is accurate.

4. Failing to Itemize Deductions

Taking the standard deduction may seem like the simplest and easiest route when doing taxes, especially if they’re pressed for time. But itemizing your deductions can sometimes save you a bundle.

5. Inaccurate Account Numbers

As this expert notes, you should always double-check your bank account and routing numbers if you want your refund direct deposited or if you’re making an electronic tax payment. Entering incorrect information can delay your refund or result in penalties and interest on late payments.

6. Changes in Your Filing Status

In addition, as Accounting Today observes, If the taxpayer was married or divorced or their household situation otherwise changed, it may need to be reflected in their official filing status.

7. Tax Deductible Charitable Contributions

The taxpayer may be able to deduct the value of their contributions when itemizing their return. Make sure to list all charitable contributions and check the math to see if the overall value is correct.

According to The Muse's interview with Koreen Jervis, an enrolled tax agent with Korjé Tax Professionals in New York City, when in doubt, “find a good preparer.” Ask for an extension, and then seek assistance from a skilled tax preparer because there are situations in which even the best tax software will not help.

Do you have the support you need to manage your small business bookkeeping? Contact us to schedule an appointment to speak with a local small business advisor.