We’re in the middle of tax season, and you may already have received a refund. If your process isn’t complete, avoid these common tax filing mistakes.
1. Not filing at all is illegal an can lead to fines. You’ll also lose out on tax refunds when you don’t file.
2. Filing too late can be costly. Prepare all your documents in January so you have plenty of time to file taxes before the April deadline. Collect receipts, W2s, 1099 forms and other paperwork, including rent certificates, well ahead of time. If you need an extension, apply for one to avoid fines.
4. Forgetting all the possible credits — claiming yourself, homestead credits and even tuition tax write-offs — can severely shrink your refund. This is especially important when you work from home.
5. Remember to add any donations to charity as write-offs on your taxes. Most charities will provide you with a receipt for your records, which you should make sure to file away safely until tax time.
6. However, lying on your taxes or writing off items such as that new car or television that aren’t actually deductible can lead to an audit by the IRS. You can make it easier by separating business and personal finances through separate accounts or creating an LLC.
7. Furthermore, make sure to add all of your income, even if it was in cash. Bloggers have learned the hard way to report any revenue over $25, and even items given to you in return for your work count as payment. Similarly, alimony and prize winnings must also be reported on your taxes.
8. Math errors can lead to greater fines or shrink your refund. Double-check your math. If math isn’t your strong suit, have someone else look at it. This might be the time to consider hiring a professional.
9. Double-check the spelling of your name, and ensure that your name is correct if you’ve recently changed it. New spouses often run into glitches because of a name change. Otherwise, the IRS might take longer to process your tax return.
10. Lack of or poor organization when it comes to taxes can be costly because you may have to file late or retrieve copies of paperwork before you can file.