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An In-Depth Look at Common Mistakes to Avoid on Your Tax Return This Year
Are you among the millions of Americans who are waiting till the last minute to file their tax return? Experts say those who wait longer tend to make more mistakes on their return form, which in turn can cost people both more money and more time. It’s estimated that over 80 percent of tax returns in 2013 were filed online. So as more and more people are skipping the middleman and filing their return themselves, it’s important to make sure you avoid a few simple-yet-costly mistakes.
Use the following tips as a guideline to help you fill out your return form both promptly and accurately. Trust us–not following this advice could be costly!
1. Wrong Filing Status
Currently, the IRS divides people into five filing statuses: 1. Single, 2. Head of Household, 3. Qualifying Widow/Widower with Dependent Children, 4. Married Filing Jointly; and 5. Married Filing Separately. Filing under your correct status helps determine your tax amount, your eligibility for deductions, and your credits. So before you start entering all your information, take a moment to make sure you’re filing under the correct status.
2. Miscalculations and Misspelled Names
Miscalculations and misspelled names are two of the most common errors people make on their tax returns. Because most returns are now being filed online, make sure you check and double check your information to make sure everything is accurate. Believe it or not, another of the most common mistakes people make is forgetting to sign their name. Keep in mind that the IRS won’t process a return without a signature, so remember: no signature, no return.
3. Bank Number Errors
If you’ve chosen to use direct deposit to get your refund, be sure your bank’s routing number and your account number are correct. Mistakes like these slow down the payment process. At the very least you’ll get a less timely refund. However, at the worst you could accrue late fees and penalties for a late payment because your tax refund wasn’t deposited in time.
4. Remembering to Include Any Additional Income
Another potentially costly mistake is forgetting to include any extra income you made throughout the year. If you worked a side job this year, then you should have received a 1099-MISC form for miscellaneous income. Forgetting to include any extra income you made could be costly, and it could potentially delay your return.
5. Spending Your Refund Wisely
Out of all the mistakes people make on their tax returns every year, squandering their refund is at the top of the list. If you’re in debt, your tax refund is a perfect way to help start you on the path to financial recovery. Additionally, filing your return sooner will help ensure you get the maximum return, so start thinking now about how you plan on using your refund.
Before filing your return, have a checklist ready with all the information and data you’ll need. For more financial management tips, and for a few helpful ideas on how you can spend your refund, visit CreditGUARD’s money management page.