With tax day nearing, countless people are hurrying to submit their returns, which can lead to some straightforward but expensive slip-ups. Errors in personal info or missed income can create delays in refunds, trigger IRS alerts, and involve costly corrections that take time. Thankfully, many of these pitfalls can be avoided with a bit of diligence.
Here are five common mistakes to watch out for and tips on how to steer clear of them.
1. Incorrect filing status
Your filing status is crucial as it influences your tax rate, standard deduction, and available credits. Choosing the wrong status might mean paying more than necessary or having your refund reduced or delayed if flagged by the IRS.
Life changes like marriage, divorce, or having a child can complicate matters. Sometimes, it’s not so clear cut—like figuring out if you qualify as a “head of household” or a “qualified surviving spouse.” It can be a bit confusing if you’re not fully aware of the IRS guidelines.
Householders typically enjoy higher deductions and better tax advantages, but there are strict criteria. If you don’t meet those criteria, you could find yourself owing taxes back with interest and penalties.
2. Missing deadlines
While you might get extensions for filing, it doesn’t mean you have extra time to pay what you owe. Most taxpayers must ensure payments are made by April 15, even if they file later.
Remember, as Mike Volkender points out, “Even if you apply for an extension, your payment is still due by April 15.” If you need more time, estimate how much you owe and try to pay by that deadline. It mitigates penalties or interest that could pile up.
3. Overlooking credits
One costly error is neglecting to claim all available credits and deductions. This can lead to a lower refund or a heftier bill.
Bill Sweeney from AARP suggests many people don’t fully understand the deductions available to them. With recent tax changes, it’s essential to reassess your situation instead of just relying on last year’s filing as a guide.
4. Filing before all documents are received
Timely filing is important. Submitting your return prematurely, before getting all necessary paperwork like W-2s or 1099s, might lead to errors. This could not only delay your processing but also necessitate corrections later on.
One tip is to check your status on the IRS website. Creating an account allows you to verify what has been filed under your tax ID, which is especially helpful if any documents are misplaced.
5. Incorrect bank information
If you opt for direct deposit, ensure the routing and account numbers are accurate. A small mistake can lead to delays in receiving your refund. Similarly, incorrect details for debit payments might result in declined transactions, racking up penalties and interest.
Filing promptly once you have everything is key, but make sure you’re not too hasty. Take your time to review before submission.
