Every year there are several things that you are doing since childhood. Preparing for Christmas and New Year are few of them. However, how can you miss out on tax planning and preparing. It is quite a daunting but can you get rid of it? No, not at all! Since tax planning and preparation is not an interesting task, taxpayers tend to make silly errors which could cost them thousands in penalties, interest and other charges. Read on, if you want to know more about top mistakes or errors that taxpayers make while preparing taxes.
There are taxpayers who usually get confuse about their filing status. As a taxpayer, you don’t file your status as per your choice. The status would depend upon the status you had on December 31st. No matter you are now married, separated or divorced, the status will be counted as of December 31st. Based on that, you can file separately or jointly. If you fail in deciding apt filing status, it would affect your eligibility to claim several tax relief and tax credit options in numerous ways. You will lose all the exemptions, if there are any errors in your filing.
Personal details is another area where lot of taxpayers commit mistakes. It’s understood that we have been writing our names, address, contact numbers and social security numbers for years. So, we don’t give them much of importance while preparing taxes. Therefore, we find silly errors like spelling mistakes and incorrect address and phone numbers in tax return. If you provide incorrect social security number, IRS can reject many of the exemptions, deductions or earned income credits you are entitled to. In case, you are preparing taxes by hand then you would need to pay more attention to all these aspects. Handwriting needs to clean and good enough to be interpreted easily.
Another common mistake made by most of the taxpayers is picking correct forms and schedules. If you are filing your taxes under incorrect schedules, they would get red flags by the IRS’ systems. This might lead to getting audited. Sometimes, taxpayers try to reduce their tax responsibility by claiming tax credit for dependents that are not even eligible. They think that IRS would not come to know about the eligibility of the dependents. Stop underestimating IRS as they have authority to check every record of yours. There are several requirements that you would need to meet in order to claim deductions. Therefore, before claiming any kind of deduction, you must check the eligibility criteria.
If you forget to attach the bills, receipts or invoices with the tax return, your return would get under the spotlight of IRS systems even if it was genuine. Therefore, before trying to claim any deduction, make sure you have collected genuine receipt or invoice of the expense so that you don’t face any hindrance in order to get the deduction.