Decodifica codice fiscal the processing of your return and the arrival of your refund. I have taken the time to put together twelve of the most common mistakes made by individuals preparing their own tax returns. These mistakes are common and can be costly.
It is easy to make a mistake when the IRS has over ten thousand tax codes! Anyone can make a mistake; even many politicians seem to be making tax mistakes! Some have come with as high of a cost as the loss of a cabinet position. However they could hold up your refund. Other mistakes can have you paying more than is required.
Albert Einstein once said, "The hardest thing in the world to understand is income tax." The IRS is often feared more than death itself. Mistakes can cause the IRS to look your way and possibly bring that most feared audit upon you. No one wants many more attention from the IRS than is necessary. So let's look at some of the simple, basic avoidable commonly made mistakes and ensure your refund arrives on time.
The following tips can be used to save you time, headaches and money!
1. Last Years Recovery Rebate The IRS noted early on that as many as 1.9 million 2009 filers had made the mistake of not reporting last year's stimulus check. Even though this income is not taxed it must be reported on your tax return. It is a guide for the IRS to use to determine if a credit is due because a credit was not received or if your situation has changed since you received the stimulus you could be entitled to additional money. To avoid delays in tax refunds it is critical that a tax payer know whether they received a payment in 2008 and the correct amount of that payment.
2. Use of the Incorrect Tax Form Often time's individuals will use a short form, the 1040EZ when they should be filing a 1040. It is easier to take the standard deduction on the shorter form but the IRS states that many tax papers are short changing themselves and missing out on millions of dollars in potential refund money.
3. Mathematical Errors Simple mathematical errors can cause you to either get more or less than you should or pay more to Uncle Sam than is needed. So this is a simple mistake rectified by setting the return aside and reviewing it a little later after your eyes have had a change in scenery and your brain has been given a break. Re-look at your math figures, recalculate them and make sure you have added and correctly subtracted. A simple procedure used by most tax preparers in the rounding of numbers and eliminating the cents. Anything at .50 and below you round down any number .51 and above you round up. This is an acceptable IRS math procedure.
4. Computation Errors Take your time. Many taxpayers are making mistakes when figuring the taxable income, withholding and estimated tax payments, Earned Income Credit, Standard Deduction for age 65 or over or blind, the taxable amount of social security benefits, and child and dependent care credit.
5. Missing or Forgetting Medical Deductions One that maybe overlooked is Medical Part B, deducted directly from your social security check. This is medical insurance cost and included in calculating your medical deductions.
You will need to keep accurate records so if you haven't done so this year you can start planning for next year to make this task of calculating your expenses easier. Keep a record of any expenses you paid out of your pocket ands were NOT reimbursed by any insurance company.
These would include doctor visits, blood work, lab tests, prescriptions, certain items such as hearing aids, batteries for the hearing aids, walkers, wheel chairs, dental exams and cleanings, dental work and eye exams, glasses, and contacts. Also includable are health insurance premiums and travel to and from the doctor's office, the hospital, dentist, ophthalmologist cover all bases and record all records so you can count all includable medical items. All of these would be for you, your spouse and any allowable dependents you claim.
6. Improper Record Keeping Keeping receipts is a simple task; however it is the simple things that get unlooked or forgotten. Make it a rule in your house to hold on to receipts. An unneeded receipt is better to have than to not have the necessary receipt to document your write off.
So it's simple, keep your receipts. I recommend having an envelope of small box in the car you can throw a receipt in, have another envelope handy in your kitchen so you can easily toss the receipt in. Some receipts need documentation, example: you are meeting a client for lunch and want to write off the lunch as a business luncheon, simply jot down on the back of the receipt who you had lunch with and a brief few words of what was discussed. It is that simple you are done, simply toss the receipt in envelope or box.
If you need to keep track of mileage driven keep a little note pad handy so you can write miles to and from, whether it is for business or medical you will have a record. Therefore if you should be audited you have a backup. It is up to the IRS to prove you made a mistake it is not you who must prove your innocence.
Keep your receipts with each year you file a return for at least up to three years. The IRS can question a deduction up to three years back. So by having your receipts if you should e audited you are prepared and will help the audit go more quickly and smoothly.
7. Incorrect Social Security Numbers Please make sure you have entered in the correct social security numbers. It is so easy to reverse numbers or accidentally switch a social security number between dependents (children and other family members) or even a spouse. This can cause all kinds of havoc with your return, such as delaying your refund, not getting the correct exemptions you are entitled to.
Often times one may be totally left off. This is simple to correct, when re-looking over your return for mathematical mistakes take the time to re-look at all social security numbers as well.
8. Incorrect or Misspelling of Dependent's Last Name When entering a dependent's last name on your tax return, be careful to enter correct spelling. The name must be entered exactly as it appears on their social security cards. Incorrect or misspelling of dependent's last name will cause delays in processing of your return.
9. Missing Tax Credits A tax credit is a dollar-for-dollar reduction of taxes owed, actually money in your pocket. Some credits are even refundable. That means you might receive a refund rather than owe any taxes. For example if you owe $1200.00 and you have $1000.00 in tax credits you will only owe $200.00. It does happen.
You might be eligible for a tax credit. Here are six popular credits you should consider before filing your 2008 Federal Income Tax Return:
The Earned Income Tax Credit is a refundable credit for low-income working individuals and families. Income and family size determine the amount of the credit.
Child and Dependent Care Credit is for expenses paid for the care of your qualifying children under age 13, or for a disabled spouse or dependent, to enable you to work or look for work.
Child Tax Credit is for people who have a qualifying child. The maximum amount of the credit is $1,000 for each qualifying child. This credit can be claimed in addition to the credit for child and dependent care expenses.
Retirement Savings Contributions Credit, also known as the Saver's Credit, is designed to help low and moderate income workers save for retirement. You may qualify if your income is below a certain limit and you contribute to an IRA or workplace retirement plan, such as a 401(k) plan. The Saver's Credit is available in addition to any other tax savings that apply.
Health Coverage Tax Credit Certain individuals, who are receiving certain Trade Adjustment Assistance, Alternative Trade Adjustment Assistance, or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a Health Coverage Tax Credit when you file your 2008 tax return.
First Time Home Buyers Credit. Individuals purchasing their first home may qualify for this credit. The credit is up to ten percent of your purchase price and a maximum of $8000.00 This credit does not have to be paid back like the previous homebuyers credit.
10. Filing Status Errors Make sure you choose the correct filing status for your situation. Know when to claim Head of Household, Widow, Single, Married Filing Separately, and Married Filed Jointly.
11. Incorrect bank account numbers for Direct Deposit If you are due a refund and requested direct deposit make sure you have entered the correct routing number and account number. If you are filing a joint return and are expecting a refund have it deposited into a joint account.
12. Forgetting to Sign Your Return Believe it or not, this is probably THE single most common tax filing error of all! With many individuals e-filing it has become less prone to happen. So far this year, almost 52 million tax returns have been e-filed, up 6 percent compared to the same time last year.
However if you are mailing in your return then please make sure both you and your spouse (when filing jointly) sign and date your return. If you forget your "John Hancock" according to the IRS you haven't technically signed your return. The IRS believes an unsigned return to be like an unsigned check - invalid.
13. Incorrectly entering your Adjusted Gross Income Information (AGI) When e-filing a common mistake can also be made when incorrectly entering your adjusted gross income information.
Taxpayers filing electronically sign the return electronically using a personal identification number. To verify their identity taxpayers will be requested to enter their AGI from their originally filed 2007 federal income tax return or their prior year PIN if they used one to file electronically last year. Taxpayers should not use an AGI amount from an amended return, Form 1040X, or a math error correction made by IRS.
If you are careful in your preparation of your returns you should receive the highest refund available to you. Just be mindful of the above tips and dot your i's and cross your t's.
Keeping Uncle Sam happy is a good thing, but retain-ing your hard earned money is also important. Proceed carefully and happy tax preparation!
Laura L.Burke, EA
Burke is a trainer, consultant and author. Please call for your companies Security training today!
She offers presentations on Taxes, Networking, Strategic Alliances, Building Relationships, First Time Home Buyers Economics, and others.
If you would like to contact Laura Burke for consulting, contributing articles, or as speaker please email her directly. Burke is also available for tax preparation; corporate/partnerships/individual.
