While no one enjoys doing their taxes, to avoid costly penalties and fees, it pays to do them correct the first time. Despite what a taxpayer may think, the Internal Revenue Service has numerous resources at its disposal which helps the agency easily identify certain tax mistakes. Not only can mistakes made on a tax return result in a larger tax bill and the accrual of tax penalties, but it can also delay the processing of a tax return.
Some of the most common tax mistakes that people make are simple addition and subtraction errors. These mistakes may occur when adding up income related columns or when an individual is attempting to figure out tax credits and deductions. Simple math errors are often easily identified by the IRS and frequently result in taxpayers receiving unexpected tax bills.
Another common tax mistake relates to failing to claim any extra income earned via contract work. By filing a 1099 form with the IRS, an employer reports any wages that a taxpayer earned as a contractor. Come tax time, a taxpayer must also account for these wages by filing a 1099 MISC form. Taxpayers who fail to claim wages via a 1099 form can expect to receive a tax bill that, depending on how much time has passed and the amount owed, may also include additional penalties and fines.
Other common tax mistakes that can end up costing a taxpayer a lot of time and potentially money include failing to include one’s Social Security number on tax documents, misspelling one’s name or using a different name when filing and entering the wrong account number(s) for direct deposit. While these errors may seem benign, they can result in a tax return delay or a tax return being deposited into the wrong account.
Individuals who have questions or concerns about filing their taxes are advised to seek help from a tax professional. When doing so, it’s important to note that a taxpayer is 100 percent liable for any and all information that is contained in a tax return so it’s important to double-check and verify the accuracy of all tax documents.
Source: Bankrate.com, “10 common tax-filing mistakes to avoid,” Kay Bell, April 4, 2016