Come tax season, many of us are bracing ourselves for tax filings and audits. Filing taxes can be stressful, but unfortunately, even the most organized and prepared filers can make mistakes that cost them money. Here are five of the most common and costly tax mistakes to avoid this year.
1. Failing to Report Income
It's important to carefully review all forms related to your income throughout the year, as failing to report any could result in an audit or penalties. Pay particular attention to any 1099s you receive at the beginning of the year and double-check income from investments or side jobs.
2. Misreporting Deductions
If a deduction is misreported on your return, you may end up with a significantly bigger bill than expected. It's also essential to note that certain deductions require additional paperwork to back them up, so ensure you have all the necessary documents ready before filing.
3. Missing Out on Credits
There are a number of credits available when it comes time to file taxes, some of which can add up quickly if you qualify for them. Make sure you know about any opportunities before filing so that you don't miss out on potential savings -- such as retirement plan contributions, tuition fees, and energy efficiency incentives, among others.
4. Incorrectly Calculating Self-Employment Taxes
If you're self-employed or own a business, it's imperative that you understand how much self-employment or corporation tax you'll owe, as well as what associated expenses count toward your deductions. There are helpful calculators online that can help determine these amounts accurately and ensure that your filing is error-free!
5. Not Using IRS e-File Services
Electronic filing offers the safest way to submit your return and ensure accuracy in calculations, plus quicker processing times than paper filings offer –all while being completely free. It may take some getting used to since each form needs its own unique PIN number, but once set up correctly, it's fairly simple to utilize.
Ultimately avoiding these common errors can save taxpayers from major headaches come April 15th - financially and emotionally. Take the time early in the season to prepare for any upcoming changes in policy or law, so you don't find yourself scrambling or paying penalty fees when it comes time for filing season!
If you are dealing with overwhelming tax debt, our team at Law Offices of Darrin T. Mish, P.A. is here to help you. Contact us today at (813) 295-7648 to schedule a consultation!