12 common tax mistakes

Maximize your refund and minimize the wait by avoiding these errors.

By Stacy Johnson Feb 28, 2013 2:35PM

This post comes from Brandon Ballenger at partner site Money Talks News.

 

Money Talks News logoAs parents know, some lessons are best learned the hard way. Doing your taxes, however, should not be one of those times.


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: 

 

Image: US government 1040 tax form © Steven Puetzer/Photographer1. Incorrect Social Security information

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.

 

11. Procrastinating

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. 

 

More on Money Talks News and MSN Money:


VIDEO ON MSN MONEY

3Comments
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I still like J. Paul Getty's advice on achieving wealth: "Rise early.  Work hard.  Strike oil."
Mar 5, 2013 9:26AM
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Biggest advise! why does almost all people in USA wait for a refund? Why do people pay too much? unless you like to give IRS billions in free loans, when they charge you interest and even "penalty" if you are 2 days late.
Mar 22, 2013 9:38PM
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first mistake is paying the blood suckers
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