Sunday, March 6, 2016

Common self-tax-preparation errors

With the plethora of self-help tax software out there, I keep bumping into situations that could have been avoided with a little more care before hitting the “send” button to e-file your return.
Here’s my list of the biggies to be watching for.
No. 1 on my list is not getting your Social Security numbers correct. This is one of the easiest and most devastating errors to make. Imagine filing your return, waiting, waiting, waiting for your refund and finally getting a nasty notice from the IRS informing you that you never filed your tax return? (Yikes! Oops!)
No. 2 (and almost a dead heat tie for No. 1) is not using your full name, and/or spelling it incorrectly, instead of exactly as it appears on your Social Security card. Once again, this can cause a multitude of problems involving receiving IRS notices, not getting credited for Social Security earnings (if you’re self employed), etc. No nicknames allowed here! If your name is “Morton Jefferson-Peabody Corkle Thorndike III,” then use it. (If that really is your name, my condolences).
No. 3 on my list isn’t having the correct bank account information for direct deposit of your refund. Get this one wrong, and you make somebody else happy when your refund shows up in their bank account. ‘Nuff said?
No. 4 is filing status errors. Make sure you know what your filing status is. Read the instructions if you’re not sure. You may be leaving money on the table in the form of lost Earned Income Credits, etc. if you mess this one up.
No. 5 is getting dependent name and Social Security information wrong. Just like numbers 1 and 2 above, not getting this right could cause the IRS to send you a notice of tax deficiency because it disallowed your dependent due to the information you used not matching the records in the Social Security computers. Listen up! Get this right or suffer the consequences!
No. 6 is not so common anymore, thanks to software being the major tool most of us use to prepare our tax returns these days. But if you prefer to torture yourself by filling out the forms the “old-fashioned way,” then beware of making math and computation errors. Double, triple, even quadruple check your whole return before sending it in.
Finally, remember to sign your return if mailing forms, or form 8879 if e-filing