Mistakes…They happen, right? Unfortunately, when mistakes are created on a tax return, it can end up being extremely costly to the taxpayer, especially when they’re self-prepared. Using a reputable tax preparer, CPA, EA, or any other knowledgeable professional – helps to eliminate these errors. This article will present ways to avoid these mistakes.
Social security numbers. When there is a missing social security number or a transposition of numbers, this will cause a delay in processing a tax return. Be sure to always double and even triple check all this information is included on the return, and that the numbers are entered correctly.
Misspelled names. When any name is entered on a tax return, a taxpayer must always enter the name exactly as shown on your social security card. This is one of the few reasons why tax professionals always ask for a copy. You never want to put a shortened version of your name. If you are Susan Friendly, you would never enter the name on your return as Sue Friendly. If your name is Robert Barker, you would never enter Bob Barker on your return. Think professional and formal…always.
Filing status. Not electing the correct filing status can affect many things on your tax return. If you choose to file your taxes using automation DIY like TurboTax, I highly suggest you review the nifty Interactive Tax Assistant tool that the IRS provides taxpayers free of charge. You answer a handful of questions, and the tax assistance will tell you what filing status you would need to file, especially if more than one status could apply.
Mathematical errors. Yes, this is one the biggest costly and common mistakes a taxpayer makes on their return. This can trigger IRS audits and a slew of other issues. The range of simple math errors is as small as basic addition and/or subtraction to more complex calculations. I highly recommend that all DIY taxpayers check their math! Or purchase more professional tax software to *help* you with the more complex calculations; this is especially helpful for those with little to no accounting or tax knowledge.
Trying to figure out deductions and credits. Taxpayers can easily (and do) make errors when trying to calculate their Earned Income Tax Credit , dependency credits, and the brand new recovery rebate credits, to name a few. Again, this is a reason why you would want a tax professional to help you. If you cannot afford a tax professional, or you prefer to DIY, then please be sure you are using the Interactive Tax Assistance tool.
Bank account numbers. This is a big one for those taxpayers that owe taxes at the end of the year or receive a refund. If you enter an account number incorrectly, there will be major repercussions. Taxpayers who use direct deposit when they are expecting a refund receive the money faster, and it’s easier to track if there was a taxpayer error in entering the routing and/or account number.
Missing signatures on the return. When a tax return is not signed, then the return is invalid. In most cases, both spouses must sign the tax return if it’s joint. Now with every, there is usually an exception. Here is the exception to this rule. If you or your spouse is a military member and deployed, he/she cannot e-sign. Here is an IRS article entitled Publication 3 (2019) Armed Forces’ Tax Guide. The other exception is a POA (Power of Attorney); you can read about that here. If a taxpayer e-files their return, this will *help* eliminate the missing signature issue because tax software requires an electronic signature to be able to send your e-file.
Expired ITINs (Individual Tax Identification Numbers). You can still file the tax return with this expired number. The IRS will still process the return, and it will be marked on time. The caveat to this is the IRS will not allow any exemptions or credits to a tax returned e-filed with an expired ITIN. That is unfortunate, but at least they still consider it filed on time (if it’s within the deadline, of course), and you will not receive any late filing penalty. The taxpayer will receive a letter from the IRS advising the client to renew their ITIN. Once the taxpayer has done the renewal, the IRS will continue to process the return as normal.
I hope this article has been helpful and made you just a bit more knowledgeable. Should you have any questions regarding this article or need tax help. Please feel free to contact us.