As they say, the only thing consistent in life is death and taxes. Both are terrible. Filing taxes is never a pleasant experience. The paperwork, the calculations, the scramble to get your paperwork in by April 15. All of it can create stress and tension between you and your loved ones as midnight on tax day approaches. However, while some of that stress and tension can’t be avoided, it can be significantly lessened by taking some extra time when preparing your returns to avoid errors. In the interest of solidarity, as fellow tax-paying sufferers, we rounded up a few experts to figure out what were the most common (and costly) tax season errors people tend to make. As you gather up your receipts and calculate all your deductions this year, take a second to make sure you haven’t accidentally pulled one of these common but costly blunders.
Ignoring Eligible Credits and Deductions
This is a big error that many people make when filing their taxes each year. There are a number of tax deductions and credits that you are most likely eligible for. The child and dependent care credit, for instance. Or the earned income credit. These deductions can save you hundreds —maybe even thousands — of dollars on your tax bill. One frequently missed deduction is the ability to deduct medical expenses,” says Lou Haverty, a CFA at Financial Analyst Insider. “In the past, this was typically missed because it was unusual to qualify because it required medical expenses to exceed 10% of adjusted gross income. Under the new tax law, this has been reduced from 10% to 7.5% of adjusted gross income (for 2017 & 2018). This change probably most benefits those people in retirement since they are more likely to incur higher than expected medical expenses and may not earn as much as they did prior to retirement.”
Not Properly Signing Your Returns
For those who wait until the last minute to file their returns, this is a common error — and it’s one that can cost you as an unsigned return is completely worthless to the IRS. And, if you and your spouse are filing jointly, make sure you both sign your return. “If not signed by both parties, the IRS will return your tax documents and ask for signatures,” says R.J. Weiss, a Certified Financial Planner and founder of the personal finance site The Ways to Wealth. “This can delay your refund weeks or even months.”
Forgetting to Instruct the IRS on How to Issue Your Refund
A lot of people bank on their return coming quickly after taxes have filed and even work this into their family budget. Forgetting to instruct the IRS on how to issue can severely delay a return and throw your ledger off. “To get your refund faster,” says Weiss. “it’s best to ask for direct deposit either when filing using tax software or by instructing your accountant.” Additionally, if you do request to have your refund deposited directly in to your account, always double check to ensure that your banking information is correct.
Typos on Your Tax Returns
These are the kinds of errors that are easily avoidable and can lead to major headaches as well as money lost down the road. Spelling and grammatical errors, or worse, blunders made when entering account numbers can grind the entire filing and refund process to a halt. Experts recommend reading the numbers and info on your returns out loud to your spouse or partner to make sure that everything is on point. “People need to double and triple check that they enter the correct information and that their calculations are correct,” says Jacob Dayan, the CEO of Community Tax. Dayan’s advice? Always use one of the numerous tax calculators around the web, including the one found on the IRS website, to help.
Disorganization Throughout the Year
The truth is, most of us don’t think about taxes until April 15 is almost upon us. As a result, a lot of crucial information gets lost. Invoices, medical forms, charity donations all can slip through the cracks and come back to bite you come spring. “You don’t have to keep a shoebox full of receipts,” says Ben Watson, a CPA and the Virtual CFO of dollarsprout.com, “but having a specific place to put important documents can save a ton of headache when tax season comes around again.” Additionally, Watson suggests double checking to ensure all of the tax forms you need to file correctly have arrived.
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