4/24/2017

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Costly Errors On Your Tax Returns

A mistake on your tax returns can cost you dearly and become a reason for an IRS audit.

When preparing your tax returns, whether you pay a professional tax consultant or prepare them yourself, you should review them thoroughly before submitting them to the Internal Revenue Service (IRS). There are certain mistakes that are commonly made that can cost tax payers dearly in terms of money and time.

Listed below are some of the errors people make when filing their tax returns, especially when they are rushing to meet the filing deadline.

  • Incorrect Social Security Number...The IRS can deny your claims if it can't verify the information that you provide. Your Social Security Number should correspond with all reported income as well as with all the deductions and credits you claim.
  • Incorrect Names...If there has been a name change since the last time you filed, you should contact your local Social Security Administration office to make the necessary changes. Make sure you file under the name and social security number as it appears on your social security card. This is also important if you are claiming dependents.
  • Forget To Sign Your Return...Many people get everything right on their returns but make one crucial mistake. They forget to sign the return which delays the processing by the IRS. This simple mistake may cause a delay in getting your refund or it may cause you to have to pay late filing penalties and interest. If you are filing jointly, make sure that your spouse signs, too.
  • Incorrect Address...Check the address and make sure it is legible. If you don't have a printed label, make sure that you printed it clearly. Whenever possible, use the peel-off label on the tax form you receive in the mail.
  • Incorrect Filing Status...How you file is important. You can file single, married filing jointly, or married filing separately. Your marital status at the end of the year is how you should make this determination, and remember, your spouse will need to agree because you can't file separately if your spouse is filing jointly or vice versa.
  • Mathematical Errors...Mathematical miscalculations can cause a big headache when least expected. Although errors are sometimes caught and corrected by the IRS, they often slip through the cracks and will cause you to get audited later. Some errors are for a few cents but others can amount to many thousands of dollars. You should check the numbers thoroughly for their accuracy, even if your taxes are prepared by professionals.
  • Use Of the Wrong Columns: You should make sure that the columns you use on your tax preparation documents are the one's you intend. If you compute your taxable income, estimated payments, withholding, or dependent credits in the wrong columns, your returns will not compute correctly and you may end up paying more or receiving less than you are entitled to. It may be cause for a future audit by the IRS.
  • Deductions That Can't Be Proven... All deductions and credits claimed on your tax return should be verifiable upon request by the IRS if you are audited. This means receipts and/or other documentation that can prove that you filed your returns correctly. Documentation of all credits and deductions is very important. To be safe, keep all receipts for claimed deductions at least 7 years.

Mistakes on your tax returns can prove to be costly, both in time and money, and they can cause a lot of unnecessary stress, especially if you are audited. To avoid mistakes, take a few minutes to thoroughly examine your returns before you submit them to the IRS.

 

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