Common tax return mistakes that can cost taxpayers to file too soon. Missing or inaccurate Social Security numbers (SSN). According to the IRS, mathematical errors are among the most common tax filing errors. They can range from basic addition and subtraction to more complex calculations.
Always review your calculations, or better yet, use tax preparation software that does the calculations for you. Making an early withdrawal from a retirement account without one of the exempt reasons entails a penalty. Generally, the taxpayer who makes this type of withdrawal is experiencing severe financial difficulties and often forgets to provide this information to their accountants or to account for it when filing their taxes. In addition, they do not take into account the additional 10% tax on distributions anticipated before the age of 59 and a half.
By omitting this information from the return, a letter will be generated from the IRS stating that the taxpayer owes an additional tax on that amount, plus the interest and penalties accrued on that additional amount until payment is made. Many taxpayers mistakenly try to declare the time they donated to a charitable organization (which is not tax-deductible), but they often overlook out-of-pocket expenses, such as the miles accumulated in their vehicles while working as volunteers, which are tax-deductible. Another common mistake in charitable giving occurs when taxpayers receive a benefit, such as receiving tickets to events in exchange for their donation. Often (and by mistake) they try to claim the full amount of their contribution in cash without subtracting the fair market value of the tickets.
The full deduction is only available if the taxpayer rejects the entries. Meet with us to outline your strategy. No more commitment, 100% money back guarantee. If you're not married, for example, you can file your return as single, but you may qualify for more favorable tax rates and other tax benefits if you meet the requirements to be a qualified head of household or widower with a dependent child.
It's important to make a copy of signed tax returns, as applications for many common types of loans, including mortgage and student loans, require previous tax information. In my years of preparing tax returns of all kinds, I've come up with a list of common mistakes that can be avoided with a little more time and attention. Filing a tax return electronically reduces errors because tax software does the calculations, points out common errors, and tells taxpayers what information is missing. In addition, your previous tax returns will be useful to you when you file future tax returns or need to file an amended return.