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Before You File: Top Tax Tips to Keep You From Making a Costly Mistake

Posted by : Premraj | Posted on : Thursday, October 27, 2016

Balancing The Account By Hand

Tax time can be stressful, especially for those who may have to fill out the more complicated forms by themselves. You may be tempted to rush through the forms just to get it over with and go on with your life, but making sure you avoid costly mistakes is just as important as filing in the first place.

If you do your taxes yourself, whether for personal or business, you must make sure that you do everything correctly and on time. Failing to properly file your taxes can result in penalties that can haunt you for years to come. If you need help, you can get your taxes done by the Alexander Law Firm, but you still need to make sure that you do everything properly. Whether you have someone prepare your taxes for you or you do them yourself, here are some major mistakes to avoid:

Filing the Wrong Information

As simple as it sounds, sometimes the simplest mistakes are the easiest ones to make. Before you submit your tax returns, you must make sure that all of the personal information on the forms is correct, without any spelling errors or misplaced numbers: the IRS will force you to redo your returns, which takes up more time and may cost you in late penalties.

One of the easiest mistakes to make is to transpose numbers in your social security number. This is usually just a result of typing too quickly, so make sure you take your time when entering the digits. If you aren’t sure about your spouse’s or your children’s number, double check against their social security cards.

Names are the other common mistake that can cause problems. Read each entry and make sure that it coincides with the information needed: if it says full name, write the full name, not your nickname.

Also, double check all figures that you enter. One small mistake can ruin the entire form.

Filing Status Mistakes

When you sit down to do your taxes, you need to consider what your filing status is. Choosing the wrong one will result in you perhaps paying more taxes than you would owe if you filed under a different status.

If you are married, you will nearly always want to file jointly, but there may be certain circumstances when you want to file separately. These can include years when you and your spouse make about the same amount of money or if you want to take advantage of certain deductions.

There are also several other statuses, such as “single” and “head of household.” Each one of these has unique qualifications and offer special tax breaks if you qualify. Before you chose, make sure you do your research to see which status suits you the best.

Filing wrongly may not only cost you in tax savings, but can also force you to re-file correctly.

Deduction and Credit Errors

One fo the best ways to save on taxes is to find all of the credits and deductions that you are entitled to, but this can be difficult sometimes. The best way to avoid losing out on these is to have a professional prepare your forms for you, or to at least use tax software that can let you know when you are eligible for deductions and credits.

Another common problem is that people will take deductions or credits that they are no longer entitled to, or abuse ones for which they are, which will raise a red flag with the IRS. Taking too many deductions — for, say, a home office without a lot of business income — or incorrectly believing that you are entitled to one can cause serious problems in the future, including a possible audit.

Submission Mistakes

After you’ve double-checked that all of your information is correct, you need to finish the job by making sure that you sign the forms correctly. This seems like a no-brainer, but it happens more often than you might think. If you leave your signature off of the forms, it will cause a delay and you will have to re-sign them to make the legal.

You may also have to file a PIN number with your taxes, which must be correct as well. As with your social security number, a digit out of place will nullify your return and you may end up facing late penalties because you have to re-file.

Don’t make costly mistakes when you file your taxes. Make sure all of the information is correct.

Robert Night has worked as an accountant for many years and is a contributor to forums and online groups where he answers common business questions regarding tax and finances, along with his articles which get published on small business blogs.

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