2/28/2013 6:35 PM ET|
12 common tax mistakes
Maximize your refund and minimize the wait by avoiding these errors.
This post comes from Brandon Ballenger at partner site Money Talks News.
Make a mistake and, best case, your refund could be delayed. It could also mean a smaller refund, extra money and time to amend your return or, in the worst case, an IRS audit.
Here's a checklist of the most common tax preparation mistakes:
If your name has changed, contact the Social Security Administration. Make sure you correctly enter your Social Security number and those of your dependents and spouse. An incorrect number could actually belong to someone else.
2. Math mistakes
Tax preparation software can help, but in some cases you may still have to tally numbers. If you do, triple-check your work.
3. Forgetting to sign
Forgetting to sign is like turning in homework without your name. Make sure you sign your return and the check, if you're sending one. Otherwise you may face delays or penalties.
4. Using the wrong forms
Software often helps by picking the relevant forms. However, sometimes using a 1040EZ won't get you as much money back as a 1040 or 1040A. And certain situations require additional forms.
5. Paying for a service you can get for free
If your income is under $51,000, check out the IRS' free Volunteer Income Tax Assistance program, or VITA. AARP also provides free tax preparation. Use its website to find an AARP tax aide near you. Make $57,000 or less and you can use free tax preparation software through the IRS Free File program. And online filing of federal income taxes is free for everyone. Note that you may have to pay extra for preparation of your state tax return.
6. Using a pro when you don't need one
If you have a simple tax situation that hasn't changed much since last year, there's no reason to pay a professional. They're going to use a version of software you can buy (or get free) yourself.
7. Waiting on a check
Filing your return electronically through IRS Free File is always free, no matter your income. But however you file, do it electronically and sign up for direct deposit to get your refund quickly, usually in less than two weeks. Triple-check your bank account number to make sure the money doesn't end up in someone else's account.
8. Not disclosing income
This can happen accidentally if you have multiple employers, or if a W2 or 1099 goes missing. Make sure you have all of the necessary forms before you begin.
9. Missing deductions and credits
Did you buy a home in the past year? Go back to school? Start working at home? Life changes and major purchases may mean tax benefits.
10. Taking out a refund loan
No matter how desperate you are for your refund, the interest and fees on refund anticipation loans or checks make them a bad idea. A better idea: Change your tax withholding so you get bigger paychecks year-round.
Tax Day is April 15. Don't wait until the last minute. That's how you make mistakes and forget deductions and credits that could have lowered your tax bill.
12. Wasting your refund
Use it wisely. Pay down debt, invest in tax-deferred retirement accounts, or at least do something memorable and fun. The biggest mistake you can make with a refund is frittering it away.
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