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5 Common Mistakes to Avoid When Filing Taxes

According to data published by The Wall Street Journal, 3.7 million Americans submitted amended federal income tax returns in 2015. These amended returns were filed to take advantage of tax deductions/credits, to submit fresh financial information, and to add new income data.

It is important to note that you cannot e-file amended returns. In other words, you have to file them by sending hard copies using the USPS. The best way to avoid the extra time and expense of filing a hard-copy amendment is to get things right the first time. Here are the ways to avoid common filing mistakes:

Math Errors

Math errors are quite common on tax returns and constitute the first category of errors to be flagged, the IRS explains. In some cases, IRS employees correct computational and clerical errors.

This is especially true for paper returns, which are more likely to have missing or misquoted figures than electronically filed returns. To avoid such mistakes, double-check the figures that you provide throughout the first two pages of your returns.

Erroneous Social Security Number

This error is particularly common among people who claim a dependent exemption, because they have to list the SSNs or ITINs for their dependents. If you have dependents, you should verify all the SSNs/ITINs listed on your tax return to ensure they are correct.

One of the best ways to do this is by double-checking all the social security numbers on your tax return against the actual cards.

Alternatively, you can verify this data from the actual cardholders.

Filing Status

Another common filing mistake that you should avoid is providing an erroneous filing status. This can occur when separated couples file their returns separately while the IRS’s records show that they are still married.

To avoid having to correct your return, verify your filing status. It determines the deductions and credits you receive, and may lower your tax responsibility. Either way, make sure to use the correct filing status or you may end up with an IRS lien on your property.

Names

While it may seem absurd, many taxpayers actually misspell their names when filing their returns due to a number of reasons.

For starters, the current tax preparation software tools do not cover the entirety and cultural diversity of American names, which means they could mispronounce your name or offer a closely similar one. If you fail to verify every detail, you could enter an incorrect name on your return.

In addition, individuals who file returns on behalf of others, including tax/financial consultants may end up mispronouncing their client’s names. Divorced individuals could accidentally use the names of former spouses even after legally adopting other names.

Erroneous Income Details

If you are a contractor or freelance employee who receives a form 1099 for taxable income, make sure to keep detailed records of all sources of income. Also, make sure to report them correctly. Penalties from the IRS for unreported earnings are very steep.

Remember, the IRS keeps track of all legal transactions via form 1099.

The penalties for this offense vary depending on the size of unreported earnings and could include wage garnishment.

It is important to note that any federal refund, credit, or extension should be filed within three years of the original filing.

Conclusion

Every year, millions of Americans file tax returns that contain mistakes, including misspelled names, erroneous income figures, computation/math errors, erroneous Social Security Numbers, and wrong filing statuses. Avoid the hassle of amending your return by thoroughly checking your math, your status, and your name before you file.