March 29, 2022
After filing taxes, many people wait with anxiety to see if the IRS accepts their tax return or initiates an audit. Along with audits, you may worry about delayed refunds or not receiving as much back as you should. The following tips can help you avoid common tax filing mistakes and get your full refund.
1. Report All Your Taxable Income for the Year
Perhaps the biggest mistake you can make when filing a tax return is failing to report all taxable income. If you don’t report all of your earnings during the year, it increases the risk of an audit, along with interest and penalties.
Taxable income may include:
- Wages and salary from your job
- Bonuses and tips from work
- Earnings from cryptocurrencies
- Investment income
- Lottery and gambling winnings
You should receive tax documents that report your income. For example, your employer should send you a W-2. If you have any investments, you should also receive 1099 forms, such as the 1099-DIV and 1099-INT. Some of these documents may come in the mail, while others need to be downloaded.
2. Choose the Right Filing Status
Choosing the wrong filing status can impact the tax credits and deductions that you may qualify for. It also determines the threshold for different tax brackets. Filing status includes:
- Married filing jointly
- Married filing separately
- Head of household
- Qualifying widow(er) with dependents
Depending on your earnings, you may end up in a higher tax bracket by selecting the wrong filing status.
3. Double Check for Misspellings and Typos
Misspelling your name or listing the wrong social security number (SSN) may hold up your return. Double-check your returns for any errors, including misspellings and incorrect figures or numbers.
The names that you include for yourself, your spouse, and your dependents should match the names on everyone’s social security cards. Any mistakes may require you to resubmit your tax return.
4. Add All Applicable Tax Credits and Deductions
You may not get the full refund that you deserve if you fail to include tax credits and deductions that you qualify for. Depending on your situation, you may qualify for a child tax credit, an earned income credit (EIC), and other credits intended to lighten your tax responsibilities.
Using electronic tax software or hiring a tax professional can help you avoid missing out on credits and deductions. Tax software automatically looks for applicable credits and calculates the totals to make sure the refund is accurate.
5. Remember to Date and Sign Your Tax Return
The IRS will not accept a tax return that is not signed and dated. If you file with a spouse, you both need to sign and date the return. When filing electronically, you type out your full name and choose a personal identification number (PIN).
6. Keep a Copy of Your Tax Return
Always keep a copy of your tax return after filing it. Having a copy of the return makes it easier to verify errors or mistakes if you get audited or believe the IRS made a mistake with your refund. You may also need to use information from past returns on current returns.
The typical recommendation is to store tax returns and other important documents for up to seven years.
7. Request an Extension for Tax Filing
If you cannot file before the tax deadline you may qualify for an extension, which pushes the deadline back six months. Filing an extension is an easy process and could save you from paying hefty penalties for not filing on time.
IRS Form 4868 allows you to extend the filing deadline from April 18th to October 15th, 2022. However, you still need to estimate how much you owe and pay your taxes by the standard deadline to avoid fines and interest on late payments.
8. File Electronically to Save Time
Submitting a paper 1040 tax return is not an error, but it could result in delays. If you want your return as quickly as possible, file electronically. Electronic returns are accepted faster, which can ease some of your stress.
Electronic filing also allows you to take advantage of the latest tax software. Electronic tax software is updated frequently to include the latest federal and state tax laws. Most software also walks you through the process of filing your taxes, including how to choose which credits and deductions you can claim.
9. Do Not Forget About Local Taxes
Most tax software allows you to easily file federal and state taxes. However, the software does not typically include an option for filing city taxes.
You may need to file local taxes separately using a paper tax form from your local government. Failure to file a local tax return on time may cost you unnecessary late fees and penalties.
In the end, filing a tax return does not need to cause stress. Pay attention to the issues discussed and always double check your tax forms for any incorrect or missing information.
If you still worry about making a mistake, consider working with a tax professional. An accountant can make sure that you get the right refund and significantly cut your chances of being audited.
If you need help with your bookkeeping and accounting, don’t hesitate to schedule a consultation with us!
Even though we are based in Albany, NY, we offer our expertise in business accounting, bookkeeping, and tax preparation all across the United States.