One of the main reason people put off doing their taxes is their fear of making mistakes.
One error, whispers that voice as soon as you start working on your 1040, and the Internal Revenue Service will jump all over it, send you nasty letters, audit your return, make your life hell.
Take a breath.
Most of the time when the IRS finds an error on a tax return, especially a math mistake, it corrects it for you. Sure you'll get a notice of the change, but this correspondence tends to be more boring than totally terrifying.
Still, you don't want to mess up your 1040 (or 1040A or 1040EZ), especially if you've taken this much time to file.So be careful as you work to finish your return in time for the Oct. 15 extended filing deadline.
Today's edition of the Oct. 15 final tax filing countdown lists 10 common tax errors that could cost you:
1. Math mistakes: This is the top tax filing error every single year. Tax preparation software has helped cut down on addition, subtraction and multiplication mistakes, but remember: Garbage in, garbage out. So double check the amounts you enter on your form or the software calculator will take that amount and spread it across the rest of your return.
2. Wrong Form 1040: If you can use the simplest Form 1040EZ, good for you. But don't opt for the easiest filing form just because it's one page. You'll find more tax break options on the 1040A and 1040.
3. Incorrect Social Security numbers: Just like with math errors, if you transpose any of these nine numbers your tax software won't catch it. The IRS, however, will. And the tax man will either kick out your filing altogether or disallow some deductions or credits, usually child-related ones, that require a Social Security number for processing.
4. Dependent issues: Speaking of kids, make sure you they are indeed your qualifying child for the particular tax situation for which they are claimed. Read the instructions carefully. The requirements are not the same in all cases. And not that they're different still for a qualifying relative you wish to claim as a dependent.
5. Wrong deduction method: You don't have to use the same deduction method every year. Most folks still claim the standard deduction, but a change in your life could mean you'd do better by itemizing your expenses. This could be the case if you had more medical expenses than usual or bought a home and can now claim some of those costs.
6. Wrong filing status: The five filing status choice are pretty self-explanatory. But double check, especially if your marital or child custody situation changed during the tax year. You might be able to claim the more tax-advantageous head of household filing status.
7. Overlooked income: If all your income is from your salary, this shouldn't be a problem because you'll get a W-2 from your employer. But if you got other income, either from a side job or investments, make sure you include those amounts on your return. In many cases, you'll get a 1099 reminding you of the earnings. So will the IRS. If its totaling of your income doesn't add up to the amounts on those forms, you'll hear from the tax man. I know. It happened to me one year.
8. Forgotten charitable donations: Good for you for donating to your favorite charity. Now be sure you take full tax advantage of your generosity. Double check your check register, credit card receipts and other financial records so that don't forget to deduct any charitable cash gifts. And remember to also add in the value of donated goods and other uncommon charitable gifts.
9. Missed tax credits: A lot of folks have been out of work for part of the tax year or took jobs that paid a lot less than they previously earned. They might now qualify for the Earned Income Tax Credit (EITC). Also be sure not to miss the retirement savers and home energy improvement credits, as well as the more commonly claimed child care credit and a couple of educational tax credits.
10. Direct deposit account errors: Finally, make sure one last batch of numbers doesn't mess up your filing. If you're getting a refund -- yes, some folks put off filing until the last-minute even when they're getting money back -- and want it directly deposited, make sure you correctly enter your account and routing numbers. A mistake here could send your refund into bank limbo.
Here's hoping that you aren't tripped up by any of these mistakes. Just take your time to finish up your return and you won't. I'll let you get to it.You also might find these items of interest:
- Oct. 15 filing deadline countdown begins: Get organized
- 2012's Weekly and Daily Tax Tips