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Top Tax Filing Mistakes to Avoid

Top Tax Filing Mistakes to Avoid

Taxpayers find filing taxes hectic because it consumes more than thirteen hours of their time. The time consumed can extend beyond those hours depending on the complexity of your financial situation. These common mistakes cause tax return delays, owing more taxes, owing more interest and penalties, or getting an audit from the IRS. Tax filing mistakes can cost you money, so the best defense is to avoid errors. Here are the top tax filing mistakes to avoid.

Common Tax Filing Mistakes

Due to the countless US tax status and IRS regulations, tax laws are complex. However, mistakes found on tax filings are relatively simple, with or without strict rules.

1. You blow the basics.

Most taxpayers usually forget to review their filing information after filing to confirm. Cross-check that your name or dependent names are correctly spelled. Also, verify the Social Security number and ensure the tax status selected is the right one. For example, an unmarried taxpayer is filing taxes as single but could enjoy more tax benefits if filled as head of household or qualifying widow or widower with a child dependent. In the case of a married couple, there are more benefits to filing taxes separately than jointly. If you're confused about your status, you can consult with the Interactive Tax Assistant on IRS.gov for help. 

2. Your information does not correspond to you and the IRS.

Taxpayers should report their wages, bank interest, dividends, and other income using the correct information return form such as W-2, K-1, 1099, etc. the information on the record goes through the IRS and is expected to correspond with the report filed to the government computers. In case of wrong information, contact your employer or the business that filed the payment to get a corrected form. If you still haven't received the form before February ends, contact the IRS at (800) 829-1040 to get a W-2 complaint form.

3. Not withholding the full amount from your Paycheck

Poor adjustment of withholding is one of the common mistakes taxpayers face each year after the initiation of the tax reform bill. Many taxpayer returns were under-withheld, especially those utilizing the itemizing deduction method. They faced most of the impact of the new withholding rules passed in the tax reform. It is left for taxpayers to make the necessary adjustment to know the amount their employer is withholding from their paycheck, which is a step neglected by most people. The ignorance has placed over 20 percent of taxpayers in danger of under-withholding and tax debts. Although some taxpayers purposely file under-withheld taxes to save, it is advisable to talk to your human resources manager about adjusting your withheld figures. 

4. Unable to decide the correct deduction method.

Itemizing the deduction method is more complex because of the number of receipts and evidence needed, unlike the standard deduction method. The standard may be easy, but you can lose a lot by automatically filing a standard deduction. Instead, choose the method that creates more space for tax deductions. Keep in mind that the standard method was doubled by the Tax Cuts and Jobs Act of 2018. Nevertheless, it is best to use more ways to find the best, or you can leave it to the tax calculator to decide.

5. You forgot your state healthcare individual mandate.

Most taxpayers forget that the government cut off the Affordable Care Act (ACA) in 2019. However, the act allows taxpayers to pay the monthly penalty to qualify for health benefits. However, you can still enjoy these benefits in some states' health insurance mandates. As of 2021, five states and the District of Columbia have implemented their health care mandate. 

  • California

  • District of Columbia

  • Massachusetts

  • New Jersey

  • Rhode Island

  • Vermont 



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