5 Tax Mistakes You Don’t Want to Make
You’re hunched over a desk, buried in paperwork, when you’d rather be out enjoying the first signs of spring: Welcome to tax time. Before you mail Uncle Sam his dues on April 15, double-check the numbers and information you’re sending, especially if you choose to do your own taxes. Here, five common errors to look for.
Math mistakes. According to the IRS, bad calculations account for most of the errors on tax returns. Even though you passed fifth-grade math, all of the adding and subtracting on the forms can be confusing. Check over your calculations, and make sure you haven’t switched numbers around. (Jotting down 2,500 instead of 5,200 can make a big difference.) If you’re in over your head, try using a software program like TurboTax, which does the math for you.
Confusion over credits. You might qualify for more tax credits and deductions than you first think. By claiming these, you can lower the amount of income you’ll be taxed for. Look for deductions related to education and IRA contributions. (These guidelines from Bankrate can help). On average, Americans send Uncle Sam $400 more than he’s due at tax time. So take the time to find deductions and credits that apply to you—it could save you hundreds of dollars.
Saying no to itemized deductions. It’s easy to take the standard deduction and be done, but it could cost you more in the end. Take some time to see if itemizing deductions will benefit you more. You can include medical expenses if they are more than 7.5% of your adjusted gross income. That might sound like a lot, but those bills add up fast. You can also count dental bills, as well as expenses that your insurance doesn’t cover, such as an extra pair of glasses or contacts. Visit irs.gov for a more in-depth list of medical expenses. You can also deduct state and local income taxes. Any charitable contributions to goodwill stores or other nonprofits count too. You can even include job-related expenses that your employer didn’t reimburse you for. So if you took a class to help boost your career, or spent money looking for a job, you could get some of that back.
Forgetting to include your social security number. Here’s another no-brainer, but an oh-too-often missed part: your social security number. The IRS cites this as another top mistake made by taxpayers. How to avoid it? Check the form and look for the space to fill it in. Make sure that you not only write in your social security number, but that you put in the correct figures.
Missing documents. You may have to send in documents that show proof of what you earned last year. If you don’t send them in, the IRS can’t confirm that the information you’re sending is correct. So check to make sure you’ve included any necessary receipts, W-2s, 1099s, etc.
Once you’re done, take time to double-check everything. Set aside a few hours to make sure the information is correct and that you are taking advantage of any tax opportunities that apply to you. Ask for help if you need it. And use a tax software program if you want an extra boost. When you’re finished, sign your name and send away. You’re free to smell the roses until next April.