Filing taxes is rough. Surprisingly, twenty-three countries around the world don’t have income taxes. Of that number, six are rich in crude oil reserves. Unfortunately, if you live outside those lucky countries you will have to face the task of filing a tax return. To ease the process a little and help dodge blunders, here are some common tax mistakes you need to avoid.
Running late without proper procedures
The first common tax mistake people tend to make is procrastination and thus failing to file their taxes by the given deadline. Now, it can seem like a silly concern. After all, taxes are an important duty, and not filing them can lead you into a lot of trouble. So, make sure to set up plenty of reminders well in advance so you can dodge that scenario! Of course, you might plan on filing your taxes late for whatever reason. In this case, you need to request an extension from the IRS. If you decide to do this you still need to estimate how much taxes you will owe and pay them by the deadline because any unpaid taxes will result in a penalty in addition to the owed taxes.
Forgetting to include some of your income
Learn how to manage your money – all of it! Forgetting about some aspect of your income can result in an actual audit from the IRS landing in your lap. Be sure to include all your investments, bank accounts, and every last cent of the money you have earned from your job. Then double and triple-check all of those amounts. Among all the common tax mistakes that you need to avoid, forgetting to file some of your income is perhaps the most egregious when it comes to potential consequences.
Entering the wrong social security number
Another common tax mistake that you can’t see yourself making, right? You’d be shocked by the number of people who make this mistake every year. It takes a moment of “fat-fingeredness” followed by forgetting to double-check the entered data, and voila! Suddenly, your social security number is wrong, and you are in for a lengthy process of trying to fix the blunder.
Missing out on tax benefits
Now, this is far more common than you may think. Employers who often offer tax benefits to their employees do not go out of their way to inform them about it. And if you do not file for them, the IRS will not go out of its way to provide them. Similarly, you can qualify for any number of tax benefits due to various circumstances. It is impossible to list them all out due to how extensive the list is, so you are best off carefully looking into them on your own.
Filing your taxes the wrong way
Filing taxes is tough, and we get it. It can be confusing, and if you are not experienced with it, it can be easy to mess up how you are doing it. The most common tax mistakes of this type that you need to avoid often stem from starting your own business. Managing small business finances can be tricky all on its own, after all. However, note that all the money you make through your business is definitely counted as income. At the same time, you can file for all sorts of benefits and expense deductions due to your status.
Misfiling your status
Your marital status should be a straightforward thing to file. However, many people make this common tax mistake by messing up this part of the filing process. The available choices are:
- Single
- Married filing jointly
- Married filing separately
- Qualifying widow(er)
- Head of household
However, keep in mind that sometimes, considering yourself ‘married’ or ‘head of household,’ or even ‘single’ requires drawing a line between personal perception and your legal status. You need to follow the law’s classification status of you here and not your personal feelings on the matter.
Refusing to get help
Sometimes, the worst mistake you can make is refusing to acknowledge that you need assistance. There is nothing wrong with looking for a tax relief company and shuffling aside to let experts step in. It is a much better option than messing something up, forgetting or not knowing how to include necessary documentation, or running late due to struggling with your taxes. If the cost of such services is your concern, then keep in mind that you might pay the IRS a lot more if something goes wrong. And it is better to avoid ever having issues with the IRS. If you know anyone who has dealt with the problem, you know what we are talking about.
Making minor mistakes
Carelessness – the enemy of everyone everywhere. And a substantial contributor to common tax mistakes. One of the most frequent mistakes of this type is messing up basic math. A moment of inattention and you are suddenly entering the wrong numbers! Misspellings of all kinds are also very common, as is messing up your account number and failing to get your tax refund. Or perhaps you did not put enough postage on the envelope or mailed all the files to the wrong IRS office. Unfortunately, there is no reliable way to prevent such things from happening, inducing plenty of anxiety in every poor soul filing their taxes. The only thing you can do is be extra careful and triple-check everything. This is, however, an excellent example of why filing taxes and bookkeeping, in general, are one of the top tasks businesses should outsource.
Final word
Now that you are familiar with the common tax mistakes you need to avoid, you may feel ready. However, keep in mind that you should never drop your vigilance during the tax filing process. Most of the things listed in this text result from carelessness and negligence. Even if you’ve filed taxes a thousand times, it is still best to approach the task with the same care as when you first did it!
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