Tax returns are reports of tax liabilities and payments which also include financial information. In the United States, tax returns contain information used to calculate income tax which is filed with the Internal Revenue Service (IRS) or with the state or local tax collection agency. It is generally prepared using forms prescribed by the IRS.
The information provided will determine the amount of tax liability and taxation authority can also check on taxpayer's calculations. In the US, taxpayers who make errors in the tax returns are allowed to file an amended return with the IRS for corrections. If the taxpayer made some mathematical or clerical errors during the processing of the tax return and IRS make the necessary corrections, filing an amended return is not needed. Human as we are, we all make mistakes but errors in tax returns can be avoided by using IRS e-file. People who do their taxes on paper more likely to commit errors than e-filers.
The following are the common tax return mistakes committed by taxpayers:
1. Social Security numbers are inaccurate. Make sure you enter all SSNs on your tax return exactly as they are on the Social Security cards. This sequence number is vital in claiming your tax credits which include child tax and additional child tax credits, educational expenses and dependent-care cost.
2. Misspelled or different names. Correct words are equally important with all the numbers entered on the tax return. Be sure to spell the names on your tax return exactly as they are on their Social Security cards, such as the taxpayer’s name, children’s name, his or her spouse. If the names don’t match it may slows down the processing of the tax returns.
This usually happens for newly married women, Social Security Agency must be informed of your name change soon after the wedding so name change won’t cause a problem in filing your joint tax returns.
3. Filing status errors. Choosing the correct filing status will sure make a difference in your tax bill. For instance, you got divorced and it is your first time to file, be sure to write “head of the household” since you are now a single parent. It will be more beneficial for the situation.
The Interactive Tax Assistant on IRS.gov can help you choose the right tax-filing status that best fits your personal tax situation. The tax software helps e-filers choose.
4. Math miscalculations. Math errors are common, from simple addition or subtraction to more complex items. The transferring of figures from one schedule to another is the common cause of the mistake. Sometimes you enter a rumbled figure of 53,050 when the correct figure is 50,305 which makes a lot of difference.
Taxpayers should always double check their math. Using a tax-software program can reduce math errors. The built-in calculators can do the adding, subtracting and the inserting of numbers in the prescribed forms, so file electronically.
5. Computation errors in credits or deductions. Taxpayers or their tax pros make mistakes in figuring such tax-return entries as taxable income, Earned Income Tax Credit, Child Dependent Care Credit, standard deduction withholding and estimated tax payments.
The credits and special deductions also pose problems in the filing. Older taxpayers or aged 65 years old and up or blind make the usual errors in calculating the correct, higher standard deduction. These errors occurred in transferring of figures to other worksheets or forms.
The IRS Interactive Tax Assistant can help determine if a taxpayer is eligible for tax credits or deductions.
6. Wrong bank account numbers. Taxpayers should choose to get a refund by direct deposit, sometimes through multiple accounts. This option is great to save the refund, just make sure numbers are correctly entered and sequenced. Even if your refund goes into a single account, double check if the account or routing number is correct or you will lose your refund.
The fastest and safest way to get a tax refund is to combine e-file with direct deposit. Your refund will end up in someone else’s account or be sent back to the IRS due to carelessness. And you might not be able to retrieve your refund because there is no IRS procedure for replacing lost electronically transferred funds.
7. Forms not signed or dated. The IRS won’t process if date and signature are missing. An unsigned tax return is an invalid one. Remember, if it is joint filing, both spouses must sign the return.
Taxpayers who file electronically must sign the return electronically using a personal identification number, or PIN. For verification, you’ll have to provide the PIN you used last year or your adjusted gross income from your previous year’s tax return.
8. Electronic filing PIN errors. When using e-file, you sign electronically with a Personal Identification Number. You can also use the last year’s e-file PIN. If not, you’ll need to enter the Adjusted Gross Income from your previous year’s originally-filed federal tax return. Don’t use the AGI amount from an amended return or return that the IRS corrected.
Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
