You’ve sorted through a whole year’s worth of receipts, bills, and 1099s, and your tax forms are all filled out from top to bottom. But not so fast: Before you send in your paperwork, take the time to do one last check for errors. Catching your problem before the IRS does could save you thousands in penalties. Here are some of the most common tax mistakes individuals and businesses alike tend to make.
1) Bad math – Even if you consider yourself a math whiz, always use a calculator when working out your taxes for the IRS. Run the numbers at least two or three times to make sure your errant fingers won’t cost you a penalty for fraudulent figures.
2) An unsigned return – You know the section of the form that says “sign here?” Make sure you sign and date it, or, as far as the IRS is concerned, you haven’t filed a return at all, no matter what else is on the form. It may seem basic, but according to the IRS, it’s one of the most common tax blunders.
3) Incorrect Social Security or Employer Identification Number – These strings of numbers are your virtual identity within the tax system, so it’s essential to get them right. When it comes to your Social Security number, be sure to enter the numbers, and associated names, exactly as they appear on your Social Security cards or business license.
4) Unreported income – You were careful to calculate all of your business income, but neglected to take note of the capital gains you made from selling your Apple stock. Watch out: If you’re selected for an audit, you’ll be forced to pay steep penalties for making these kinds of mistakes.
5) Claiming too many credits or deductions - Many taxpayers claim deductions and credits they are not technically eligible for, which could leave them open to charges of tax evasion. Triple-check the IRS’ regulations for any deduction or credit you are claiming to ensure that you meet the criteria.
6) Not claiming enough deductions – You won’t get in trouble with Uncle Sam over this one, but you’ll lost money nonetheless. Millions of taxpayers forget to claim credits and deductions that they are entitled to, such as mortgage interest payments, dependent care payments (up to a certain limit), and charitable contributions. Don’t overlook these business tax deductions, either.
7) Forgetting to include all necessary documentation – The IRS generally requires forms and schedules such as 1099s and receipts related to your business deductions to be included with your return. Failure to include this documentation could result in penalties.
8) Forgetting the check – The paperwork is important, but if you owe the IRS money, they want that, too. If you’re filing by mail, be sure that you’ve included a check or money order, and write your Social Security number, tax form number, and tax year in the memo space.
9) Sending your paperwork to the wrong address – The IRS has offices all over the place, and you’re likely to need to send different forms and payments to different offices. Misaddressing your paperwork could lead to a delay in processing, or your file could end up lost altogether.