Codice fiscale
calcolo inverso the processing of your return and the arrival of your refund. I
have taken the time to put together twelve of the most common mistakes made by
individuals preparing their own tax returns. These mistakes are common and can
be costly.
It is easy to make a
mistake when the IRS has over ten thousand tax codes! Anyone can make a
mistake; even many politicians seem to be making tax mistakes! Some have come
with as high of a cost as the loss of a cabinet position. However they could
hold up your refund. Other mistakes can have you paying more than is required.
Albert Einstein once
said, "The hardest thing in the world to understand is income tax."
The IRS is often feared more than death itself. Mistakes can cause the IRS to
look your way and possibly bring that most feared audit upon you. No one wants
many more attention from the IRS than is necessary. So let's look at some of
the simple, basic avoidable commonly made mistakes and ensure your refund
arrives on time.
The following tips can
be used to save you time, headaches and money!
1. Last Years Recovery
Rebate The IRS noted early on
that as many as 1.9 million 2009 filers had made the mistake of not reporting
last year's stimulus check. Even though this income is not taxed it must be
reported on your tax return. It is a guide for the IRS to use to determine if a
credit is due because a credit was not received or if your situation has
changed since you received the stimulus you could be entitled to additional
money. To avoid delays in tax refunds it is critical that a tax payer know
whether they received a payment in 2008 and the correct amount of that payment.
2. Use of the
Incorrect Tax Form Often time's
individuals will use a short form, the 1040EZ when they should be filing a
1040. It is easier to take the standard deduction on the shorter form but the
IRS states that many tax papers are short changing themselves and missing out
on millions of dollars in potential refund money.
3. Mathematical Errors Simple mathematical errors can cause you to
either get more or less than you should or pay more to Uncle Sam than is
needed. So this is a simple mistake rectified by setting the return aside and
reviewing it a little later after your eyes have had a change in scenery and
your brain has been given a break. Re-look at your math figures, recalculate
them and make sure you have added and correctly subtracted. A simple procedure
used by most tax preparers in the rounding of numbers and eliminating the
cents. Anything at .50 and below you round down any number .51 and above you
round up. This is an acceptable IRS math procedure.
4. Computation Errors Take your time. Many taxpayers are making
mistakes when figuring the taxable income, withholding and estimated tax
payments, Earned Income Credit, Standard Deduction for age 65 or over or blind,
the taxable amount of social security benefits, and child and dependent care
credit.
5. Missing or
Forgetting Medical Deductions One that maybe overlooked is Medical Part B, deducted directly
from your social security check. This is medical insurance cost and included in
calculating your medical deductions.
You will need to keep
accurate records so if you haven't done so this year you can start planning for
next year to make this task of calculating your expenses easier. Keep a record
of any expenses you paid out of your pocket ands were NOT reimbursed by any
insurance company.
These would include
doctor visits, blood work, lab tests, prescriptions, certain items such as
hearing aids, batteries for the hearing aids, walkers, wheel chairs, dental
exams and cleanings, dental work and eye exams, glasses, and contacts. Also
includable are health insurance premiums and travel to and from the doctor's
office, the hospital, dentist, ophthalmologist cover all bases and record all
records so you can count all includable medical items. All of these would be
for you, your spouse and any allowable dependents you claim.
6. Improper Record
Keeping Keeping receipts is a
simple task; however it is the simple things that get unlooked or forgotten.
Make it a rule in your house to hold on to receipts. An unneeded receipt is
better to have than to not have the necessary receipt to document your write
off.
So it's simple, keep
your receipts. I recommend having an envelope of small box in the car you can
throw a receipt in, have another envelope handy in your kitchen so you can
easily toss the receipt in. Some receipts need documentation, example: you are
meeting a client for lunch and want to write off the lunch as a business
luncheon, simply jot down on the back of the receipt who you had lunch with and
a brief few words of what was discussed. It is that simple you are done, simply
toss the receipt in envelope or box.
If you need to keep
track of mileage driven keep a little note pad handy so you can write miles to
and from, whether it is for business or medical you will have a record.
Therefore if you should be audited you have a backup. It is up to the IRS to
prove you made a mistake it is not you who must prove your innocence.
Keep your receipts
with each year you file a return for at least up to three years. The IRS can
question a deduction up to three years back. So by having your receipts if you
should e audited you are prepared and will help the audit go more quickly and
smoothly.
7. Incorrect Social
Security Numbers Please make sure you
have entered in the correct social security numbers. It is so easy to reverse
numbers or accidentally switch a social security number between dependents
(children and other family members) or even a spouse. This can cause all kinds
of havoc with your return, such as delaying your refund, not getting the
correct exemptions you are entitled to.
Often times one may be
totally left off. This is simple to correct, when re-looking over your return
for mathematical mistakes take the time to re-look at all social security
numbers as well.
8. Incorrect or
Misspelling of Dependent's Last Name When entering a dependent's last name on your tax return, be
careful to enter correct spelling. The name must be entered exactly as it
appears on their social security cards. Incorrect or misspelling of dependent's
last name will cause delays in processing of your return.
9. Missing Tax Credits A tax credit is a dollar-for-dollar reduction
of taxes owed, actually money in your pocket. Some credits are even refundable.
That means you might receive a refund rather than owe any taxes. For example if
you owe $1200.00 and you have $1000.00 in tax credits you will only owe
$200.00. It does happen.
You might be eligible
for a tax credit. Here are six popular credits you should consider before
filing your 2008 Federal Income Tax Return:
The Earned Income Tax
Credit is a refundable credit for low-income working individuals and families.
Income and family size determine the amount of the credit.
Child and Dependent
Care Credit is for expenses paid for the care of your qualifying children under
age 13, or for a disabled spouse or dependent, to enable you to work or look
for work.
Child Tax Credit is
for people who have a qualifying child. The maximum amount of the credit is
$1,000 for each qualifying child. This credit can be claimed in addition to the
credit for child and dependent care expenses.
Retirement Savings
Contributions Credit, also known as the Saver's Credit, is designed to help low
and moderate income workers save for retirement. You may qualify if your income
is below a certain limit and you contribute to an IRA or workplace retirement
plan, such as a 401(k) plan. The Saver's Credit is available in addition to any
other tax savings that apply.
Health Coverage Tax
Credit Certain individuals, who are receiving certain Trade Adjustment
Assistance, Alternative Trade Adjustment Assistance, or pension benefit
payments from the Pension Benefit Guaranty Corporation, may be eligible for a
Health Coverage Tax Credit when you file your 2008 tax return.
First Time Home Buyers
Credit. Individuals purchasing their first home may qualify for this credit.
The credit is up to ten percent of your purchase price and a maximum of
$8000.00 This credit does not have to be paid back like the previous homebuyers
credit.
10. Filing Status
Errors Make sure you choose
the correct filing status for your situation. Know when to claim Head of
Household, Widow, Single, Married Filing Separately, and Married Filed Jointly.
11. Incorrect bank
account numbers for Direct Deposit If you are due a refund and requested direct deposit make sure
you have entered the correct routing number and account number. If you are
filing a joint return and are expecting a refund have it deposited into a joint
account.
12. Forgetting to Sign
Your Return Believe it or not,
this is probably THE single most common tax filing error of all! With many
individuals e-filing it has become less prone to happen. So far this year,
almost 52 million tax returns have been e-filed, up 6 percent compared to the
same time last year.
However if you are
mailing in your return then please make sure both you and your spouse (when
filing jointly) sign and date your return. If you forget your "John
Hancock" according to the IRS you haven't technically signed your return.
The IRS believes an unsigned return to be like an unsigned check - invalid.
13. Incorrectly
entering your Adjusted Gross Income Information (AGI) When e-filing a common mistake can also be
made when incorrectly entering your adjusted gross income information.
Taxpayers filing
electronically sign the return electronically using a personal identification
number. To verify their identity taxpayers will be requested to enter their AGI
from their originally filed 2007 federal income tax return or their prior year PIN
if they used one to file electronically last year. Taxpayers should not use an
AGI amount from an amended return, Form 1040X, or a math error correction made
by IRS.
If you are careful in
your preparation of your returns you should receive the highest refund
available to you. Just be mindful of the above tips and dot your i's and cross
your t's.
Keeping Uncle Sam
happy is a good thing, but retain-ing your hard earned money is also important.
Proceed carefully and happy tax preparation!
Laura L.Burke, EA
Burke is a trainer,
consultant and author. Please call for your companies Security training today!
She offers
presentations on Taxes, Networking, Strategic Alliances, Building
Relationships, First Time Home Buyers Economics, and others.
If you would like to
contact Laura Burke for consulting, contributing articles, or as speaker please
email her directly. Burke is also available for tax preparation;
corporate/partnerships/individual.
