6 Tax Errors To Avoid when Preparing Your Taxes

February 9, 2018 BY AFFCU in

For every hardworking American, that time of year is upon us. Tax season is here!

But don’t get ahead of yourself or you’ll be stressed before you even start. As those first forms start rolling in, stay organized. Collect documents until you have all necessary forms to get started. You’ll also want to decide if you will do your taxes yourself, or work with an accountant in Baltimore, MD.

However you decide to go about filing your taxes, be careful to avoid tax errors that may delay your refund, make you susceptible to a fee, or even worse, force you to do the paperwork again.

Be Aware of the Most Common Tax Errors

Whether you choose DIY taxes, use a tax-prep computer program, or hand it all over to an accountant, begin by checking out our list of common tax errors.

Top 6 Tax Errors

1. Faulty math

One of the most common tax errors is simple math mistakes. A small miscalculation can throw off all your numbers and get you into trouble with the IRS.

Using an online program or a number-loving accountant may mitigate this problem, but it won’t assure you of anything. However, you choose to prepare your taxes, be sure to triple-check all the math before filing.

2. Name changes and misspellings

When preparing your taxes, you’re thinking numbers. It’s true that most of the information you’re submitting is in numerical form, but don’t forget to pay attention to everything else, too.

Details matter, and if you use a name that’s different than the one the IRS has on file for your Social Security number, your refund may be delayed or not processed at all.

Similarly, if you spell your name wrong, it won’t match the one the IRS has in its system which will likely result in a tax error.

If you’ve recently changed your legal name because of a marriage or divorce, be sure to let the Social Security Administration know. Otherwise, remember to use the correct spelling of your legal name on all your tax forms. Review all forms carefully before filing.

3. Omitting extra income

Detailing income to include bonuses and extra commission is the primary focus when preparing taxes. Many people neglect to take account of other sources of income, like freelancing, consulting, and any side work done throughout the year.

If you had a side job in 2017, fill out a 1099-MISC and file it along with your taxes.

4. Deducting funds donated to charity

You may want to write off charitable donations, but aren’t sure how to go about doing so. Charity laws are complicated and not understanding them can result in tax errors.  

There are 4 rules to deducting funds donated to charity:

  1. Donations may only be deducted if given to an organization with a tax-exempt status.
  2. Food and clothing donations must be in decent shape to be eligible as a write-off.
  3. Calculate the value of non-monetary donations based on what they are worth if you sold  them today.
  4. Don’t forget to include charity tax receipts when you file.

5. Using the most recent tax laws

Administration has made some major changes to the tax code. Most of these changes won’t take effect until April 2018, when you file your first taxes for the new year, and even later if you don’t file quarterly.

Tax filing changes effective this year include the following:  

  • The standard deduction increased to $6,350 for single, $9,350 for head of household, and $12,700 for married filing jointly.
  • The maximum earned income tax credit increased to $6,318.
  • The maximum income limit for the EITC increased to $53,930.
  • The foreign earned income deduction increased to $102,100.
  • Annual deductible amounts for Health Savings Accounts increased for individuals only, to $3,400.

 

When preparing your taxes, be sure to file according to the most recent laws to avoid tax errors.

6. Signing your forms

 

Last, but certainly not least, don’t forget to sign your name! If you’re filing through USPS mail, be sure to put your signature wherever necessary, and get a receipt.

 

If filing online, you can use a PIN instead. Most signature lines will need to be dated as well.

Avoiding Common Tax Errors When Filing

Read through all of your forms before submitting to be sure you haven’t neglected anything or made any tax errors. Being extra careful now will help you avoid any future aggravation. And knowing that your taxes are error-free gives you peace of mind as you wait for your return.