Ten Common Mistakes Tax Filers Make
Don’t you hate that thought of getting your taxes done only to realize later that you make a common mistake that could cost you time or money? The tax code seems to be getting more and more complicated every year (500 changes alone in 2008), and we all seem to be strapped for time these days. Here are 10 mistakes we see taxpayers make all the time which could put a few dollars in your pocket this tax season.
1) If you are single and are caring for an elderly parent, you should investigate seeing if you qualify for ‘head of household’ for your filing status. As a general rule of thumb, you should be paying for 50% or more of the elderly parent’s expenses.
2) You should make sure you have kept track of your charitable mileage that you drove during the year. Eligible miles will have a .14 cents on the mile write off on your tax return if you itemized your deductions.
3) Verify all of the information on the w-2 and/or 1099 information that you get come tax time. If for some reason the information is inaccurate, then notify the issuer immediately so you can get a newly issued document.
4) If you worked for more than one employer during the course of the year, you should check how much money you actually paid into social security to ensure that you didn’t overpay. You should claim a credit for any excess Social Security taxes withheld from your overall wages.
5) If you got a state refund for the prior year, remember that you must include those amounts as income on your federal tax return.
6) If you had expenses during the year such as mileage, meals, and entertainment that were unreimbursed by your employer, consider filling out form 2106 to see if you can deduct those from your tax return.
7) Make sure to include your Social Security number on every single page if you file a paper return. This is also true if you have to send in checks to the IRS for monies owed at the end of the tax year.
8) Taking a home office deduction when your employer already has an office for you.
9) Ignoring the IRS. If the IRS sends you documents regarding any questions about any part of your tax return, make sure you respond to them promptly. Many people believe that it is a good idea to wait for the document for a second or third time. This could cause you undue penalties or interest on money you owe.
10) Your math skills are rusty. So many mistakes are made or overlooked simply from poor arithmetic. Make sure to use a calculator and double or triple check your math. You would hate to have to answer to the IRS just because of poor addition, subtraction, or multiplication.
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Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder of oXYGen Financial, Inc - The Leaders in Gen X & Y Financial Advice
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