Everybody makes mistakes. But one place you should really try to avoid them is when you do your income taxes. You may think that using software will eliminate any chance for error; if only life were that simple! Before you seal that envelope or hit "send" to file electronically, read/watch this story.
Nobody goes through life without making mistakes. In fact, it’s sometimes a mistake that starts of a new human life. So messing up is certainly a part of being human. That being said, one place you might want to try to be especially careful is when you file your taxes.
Every year the IRS sends thousands of notices to taxpayers nationwide because of easily preventable errors. In these days of computer-generated returns and electronic filing, the type of mistakes may have changed: math errors, for example, are certainly less frequent now. But there are still common mistakes that a computer can’t see, so you need to be vigilant. And you have powerful motivation to do so. Because an error in a tax return can at best delay your refund and at worst result in an examination that leads to interest, penalties and major stress.
Watch this 90-second news story we just produced, then meet me on the other side for more.
Here’s another look at that list, along with some additions.
- Social Security numbers: Wrong number, no number, and misplaced digits could really ruin everything.
- Despite the use of computers, math can still be a source for errors. Especially if you’re adding numbers on the side and inputting only the total on the return.
- If you’re filing electronically, you’ll be signing your return electronically too. But if you’re not filing electronically, make sure you sign that return.
- If you’re paying by check, make sure you sign that too.
- Make sure you’re using the right form. a simple form like an EZ, when a 1040A or 1040 would get you a bigger refund. Again, some software will ask you questions to avoid this one.
- Paying to have your taxes done by a pro, or even paying for software or e-filing could be a mistake if you don’t have to. Here’s a story I did on how you can find out if you’re eligible for free help: Don’t Let Tax Help Overtax Your Budget.
- Failing to file electronically and/or use direct deposit is a mistake, at least if getting your refund back quickly is important to you. Combing electronic filing with direct deposit will convert what could take weeks into days.
- Going to fast because you’re on deadline: the quickest path a bad job is trying to do a rush job. You’ll potentially miss deductions and make other mistakes that could result in a smaller refund or bigger problems. Start early and take your time.
That’s the list from the news story you just watched. For more you can visit the IRS website. But here are two more mistakes you won’t find there. The first one is paying for a tax pro vs doing it yourself with simple software could be a mistake: check out this news story I did on that: Are Tax Pros a Waste of Money? The other is getting a tax refund anticipation loan. That’s nearly always a bad idea: Here’s a story that explains why.
Bottom line? Taxes are one of those things in life where the devil is in the details. Sometimes something seemingly simple can literally be worth thousands of dollars. So bumble, fumble and blow it in other areas of your life, but try to get this one right the first time.