The following is a guest post from TaxDebtHelp.com, a site that provides news, tax tips and IRS tax relief services.
Each year, millions of people file their tax return, and each year, millions of people make the same mistakes. To be fair, the tax codes and laws are constantly changing, which makes it challenging for even experienced tax preparers to stay on top of things. Sadly, some of the most common tax filing mistakes can cost you big money – in some cases in the form of a smaller refund check, in others, a larger tax bill to pay. With so much on the line, you may be wondering how you can avoid these common filing mistakes. The first and most important step is to know which mistakes to avoid, starting with the following:
Missing or incorrect identification numbers
The IRS has to process millions of tax returns in a short period of time. This means that each tax return will need a specific identification number (social security or EIN) to keep things straight. Since this number helps the IRS identify you, it must be correct and match the identification number on your supporting documents, such as W-2 forms. You must make sure that your ID number is correct as well as the ID number of anyone else appearing on your income tax return.
When you claim tax credits and deductions, be prepared to back up that claim with documentation. Failure to provide the necessary documentation substantiating your claim may result in the loss of the credit or deduction. If you have already received the credit or deduction and you are audited, you may have to repay the money to the IRS.
Overlooking income and deductions
If you fail to include all earned income, rest assured that the IRS will not. The previously mentioned identification number makes it possible for the IRS to track all earned income, and you will be held liable for that amount even if you have failed to report it. On the other hand, if you miss out on a deduction, you likely will not receive a bonus from the IRS; therefore, it is in your best interest to ensure you have all eligible deductions claimed before filing your return.
Failing to sign
Failing to sign your tax return is a simple mistake with costly consequences. If you fail to sign your paper return, the IRS will not process that return. Should you be one of those filers who waited until the last minute, by the time you can re-file you may be getting hit with late filing penalties which leads us to our next common mistake.
Not filing on time
IRS tax filing deadlines are non-negotiable. You cannot claim that it is “in the mail” and expect it to hold water. If you are unable to file on time, consult a tax professional to learn what you must do to request an extension. Many filers are under the false impression that filing late will somehow prevent penalties and interest applied to an unpaid tax liability. This is not the case. If you owe the IRS money and don’t have the full amount to send by the deadline, do not let this stop you from filing your return on time. You will still have to pay the tax liability and any penalties or interest regardless of when you file. What you will avoid is paying the late-filing penalty on top of the failure-to-pay penalties.