Matter & Substance
  March 26, 2024

Most Common Mistakes on Tax Returns & How to Avoid Them

For many filers, tax season can be a time of stress and confusion. Navigating 1040s can be daunting, especially with the constant flux of rules and regulations governing the process. However, with a keen eye for detail and a proactive approach, you can sidestep some of the most common pitfalls. In this article, we'll highlight the most prevalent mistakes seen on tax returns and provide actionable steps to avoid them.

11 Common Tax Mistakes

Before diving into the strategies for avoiding these pitfalls, let's first identify the most common mistakes that taxpayers make:

  1. Missing the Tax Filing Deadline

    What to do to avoid it: To stay abreast of the current deadlines,check with the IRS on when and what to file, and mark the tax filing deadline on your calendar well in advance. Set reminders or utilize tax preparation software that alerts you of approaching deadlines. If you're unable to file by the deadline, consider filing for an extension to avoid penalties.

  2. Providing an Incorrect Social Security Number (SSN)

    Your SSN is a crucial piece of information used to identify you and process your tax return. By accidentally switching digits or making another kind of typo, you can set off a series of events when you file including processing delays and other potential issues with the IRS.
    What to do to avoid it: Double-check the SSNs of yourself, your spouse, and any dependents before submitting your tax return. Refer to Social Security cards or official documents to ensure accuracy. If you've recently changed your name due to marriage or divorce, notify the Social Security Administration to update your records.

  3.  Misspelling Names

    What to do to avoid it: Verify the spelling of names against official documents, such as driver's licenses or birth certificates. Take extra care when entering names into tax forms to ensure accuracy. If there are any discrepancies, resolve them before filing your return to prevent processing delays.

  4. Using the Wrong Tax Filing Status

    Your tax filing status determines your tax rate and eligibility for certain deductions and credits. Using the wrong status can result in incorrect tax calculations and missed opportunities for tax savings.
    What to do to avoid it: Review the IRS guidelines for determining your filing status carefully. Consider factors such as marital status, dependents, and household arrangements. If you're unsure which filing status to use, consult with a tax professional for guidance based on your specific circumstances.

  5. Entering the Wrong Bank Information

    If you're expecting a tax refund and opt for direct deposit, ensure that you provide accurate bank information. Errors in bank details can lead to delays in receiving your refund or, in worst-case scenarios, depositing funds into the wrong account.
    What to do to avoid it: Obtain a voided check or direct deposit form from your bank to ensure accurate bank information entry. Triple-check the routing and account numbers before submitting your return. If you're unsure about the accuracy of your bank details, opt for a paper check instead of direct deposit.

  6. Math Errors

    These days, most returns are filed using electronic software that does the math for you. But even though basic arithmetic mistakes may seem trivial, they can have significant consequences on your tax return. Even minor errors in calculations can result in inaccuracies that trigger IRS scrutiny.
    What to do to avoid it: Use tax preparation software or a calculator to perform all calculations accurately. Double-check your math when completing tax forms, especially when dealing with multiple calculations or complex figures. If you're unsure about a calculation, seek assistance from a tax professional to ensure accuracy.

  7. Missing out on Tax Deductions

    Failing to claim eligible tax deductions means you're leaving money on the table. It's essential to thoroughly review the available deductions and ensure you're maximizing your tax savings.
    What to do to avoid it: Thoroughly review the list of available tax deductions and credits provided by the IRS. Keep detailed records of eligible expenses throughout the year, including receipts and documentation. Consider consulting with a tax advisor to identify overlooked deductions and maximize your tax savings.

  8. Claiming Ineligible Deductions or Credits

    While it's crucial to claim all eligible deductions and credits, it's equally important not to overreach. Claiming deductions or credits for which you're not eligible can raise red flags with the IRS and result in audits or penalties.
    What to do to avoid it: Familiarize yourself with the eligibility criteria for each deduction or credit before claiming it on your tax return. Keep abreast of changes to tax laws that may impact your eligibility for certain deductions or credits. If you're uncertain about the eligibility of a deduction or credit, seek clarification from a tax professional.

  9. Failure to Include Required Paperwork & Forms

    Supporting documentation is essential for substantiating your tax claims. Neglecting to include necessary paperwork or forms can result in delays in processing and potential challenges from the IRS.
    What to do to avoid it: Compile all necessary paperwork and forms before starting your tax return. This may include W-2s, 1099s, receipts for deductible expenses, and supporting documentation for credits claimed. Organize your documents systematically to facilitate accurate completion of your tax return.

  10.  Forgetting to Sign the Tax Return

    Your signature serves as validation that the information provided on your tax return is accurate and complete. Forgetting to sign your return can invalidate it, leading to delays and potential penalties.
    What to do to avoid it: Electronic filing often negates this risk, but if you need to paper file, make signing your tax return a priority before submission. If filing jointly with a spouse, ensure both spouses sign the return where required. Review the signature requirements outlined by the IRS to avoid any oversights.

  11. Not Filing a Tax Return

    Some taxpayers mistakenly believe that if they don't owe taxes, they don't need to file a return. However, failing to file when required can result in penalties and missed opportunities for refunds.
    What to do to avoid it: Determine whether you're required to file a tax return based on your income, filing status, and other relevant factors. Utilize IRS resources, such as the Interactive Tax Assistant, to determine your filing obligations. If in doubt, err on the side of caution and file a return to avoid penalties for non-compliance.

How to Avoid Common Tax Mistakes

Complying with FATCA reporting requirements can be complex and challenging for financial institutions. They must collect and report detailed information about U.S. account holders, including their names, addresses, taxpayer identification numbers (TINs), and account balances. Moreover, they must navigate different reporting formats and deadlines, depending on their jurisdiction and any applicable IGAs.

  • Follow Instructions Closely

    The IRS provides detailed instructions for each tax form, including guidance on how to fill it out correctly. Take the time to read and understand these instructions to ensure compliance and accuracy.

  • Double-Check Your Information

    Before submitting your tax return, review all information for accuracy. Verify names, SSNs, and financial data to minimize the risk of errors.

  • Review Your Tax Return Before Filing

    A final review of your tax return can catch any overlooked mistakes or discrepancies. Take the time to scrutinize each line item and ensure consistency throughout the form.

  • Get Help from a Tax Professional

    If you're unsure about any aspect of your tax return or have a complex tax situation, seeking assistance from a qualified tax professional can provide peace of mind. They can offer expert guidance and ensure compliance with tax laws.

Contact Mowery & Schoenfeld for Help Avoiding Common Tax Filing Mistakes

At Mowery & Schoenfeld, we understand the complexities of tax filing and are here to help. Our team of experienced professionals can assist you in navigating the intricacies of tax law, minimizing the risk of errors and maximizing your tax savings. Don't let common tax mistakes derail your financial health. Contact us today to schedule a consultation and take control of your tax strategy.

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