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The Most Common Tax Filing Blunders
- Math Errors
- Incorrect Income Reporting
- Mistakes on Personal Information
- Missing a Signature
- Late Filing
Anyone who decides to fill out their taxes without the help of a tax professional may make a number of common tax filing mistakes. Even if a taxpayer considers himself an expert in math, there are still several easy ways to reach the end of the family’s 1040 with mistakes. Here are some of the most common tax blunders that Americans routinely make each April when they submit their federal and state income tax forms.
1. Math Errors
The mathematical calculations required on the average tax form aren’t anything that someone wouldn’t have learned in high school math, but countless taxpayers still make simple math mistakes on their tax forms. From transposing numbers to adding incorrectly, every line of a tax form represents another opportunity for an error. When a taxpayer makes a simple error, the Internal Revenue Service (IRS) will usually send a corrected estimate of taxes owed or refund due. More complex errors may require a call to the tax agency to correct the matter.
2. Incorrect Income Reporting
While there are some taxpayers who will try to hide income from the government, many taxpayers misreport their total income because they don’t realize they should report some types of income to the government. For example, someone who settles a debt with a creditor where the amount discharged exceeds $600 must report the amount forgiven as income when they receive a 1099-C in the mail. Further, the IRS explains that some canceled debt is taxable but another debt isn’t taxable.
3. Mistakes on Personal Information
A tax payer’s home address isn’t the only personal information that he or she must enter on a tax form. People often make mistakes with filing status, or they mix up the numbers of their Social Security number. Investment company Charles Schwab & Co. reveals that it’s often the simplest entries that create problems with transposed letters, incorrect information, and blank entries. Taking a second or third look at a tax form will help, and having a spouse or family member scan the document can also help to reduce errors in personal information.
4. Missing a Signature
It might seem like common sense to sign a tax form after filling it out, but it’s not uncommon for the IRS to receive unsigned tax forms. Not only do taxpayers forget to sign their tax forms, but they also forget to sign their checks. Unfortunately, forgetting to place a signature on a tax form may mean the document is invalid, according to the Journal of Accountancy. Even if a taxpayer sends in an additional form at a later date that has a signature attached, the IRS may treat it as having been received late and may attach fees and penalties to the return.
5. Late Filing
April 15th is the date on which the IRS requires tax returns to be electronically submitted or postmarked. When the 15th of April falls on a weekend, the IRS may push the date to the first business day. Paying taxes late may mean financial penalties and invalidation of past tax payment agreements.
From taxpayers who submit a single 1040EZ to taxpayers who must send in pages and pages of forms and schedules, anyone can make a filing mistake. Fortunately, the IRS will work with taxpayers to correct their errors, but making too many blunders may eventually result in harsh penalties. Avoiding tax filing mistakes simply requires attention to detail and the willingness to speak with a tax professional when the forms become too complicated.