Wednesday, February 8, 2017

Beware of These 7 Common Income Tax Blunders

FROM http://www.accountingweb.com/

Come April, the annual rite of passage known as filing your income taxes will be upon us, but this year there is some good news for taxpayers.

Because April 15 falls on a weekend and the following Monday is a federal holiday, taxes are due by midnight on Tuesday, April 18.

Preparing taxes is always challenging, whether taxpayers do it on their own or get information ready for their CPA or tax professional. And while using tax-preparation software can make the process less complicated, even one small error or omission can trigger problems and delays in getting a refund.

To ensure a smooth tax-filing process, the Illinois CPA Society provides seven common mistakes to avoid this tax season.

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1. Math errors. Still the most common mistake made on tax returns. Even if all your calculations are correct, an error in your initial figures can throw everything off.

2. Misspelled or changed names. Sometimes the easiest portions of a tax return can create the biggest hang-ups with a misspelled name or a changed name that’s not correctly listed.

3. Wrong Social Security numbers. An incorrect Social Security number or forgetting to list numbers for you or your dependents can create unexpected problems. Social Security numbers serve as individual tax identification numbers.

4. Incorrect direct deposit information. Having your refund direct deposited into your bank account is convenient, but make sure your account numbers are correct on your return, especially if you’re listing multiple accounts.

5. Changes to your filing status. If you were married, divorced, or your household situation changed, this may need to be reflected in your official filing status. A tax professional can help you determine the correct and most beneficial status for your situation.

The IRS provides five filing status options for all taxpayers:

Single
Married, filing jointly
Married, filing separately
Head of household
Qualifying widow(er) with dependent child

6. Not keeping tabs of charitable contributions. If you donated cash or gifts to qualified charities and not-for-profit organizations in the past year, you may be able to deduct the value of your contribution when itemizing your return. Make sure to list the total amount for all charitable contributions and check the math to see if the overall value is correct.

7. Don’t forget to sign and date your return. After all the time and effort that went into preparing your return, make sure to sign and date on the bottom line.

And don’t forget, all returns are due by midnight on April 18. Filing Form 4868, Application for Automatic Extension of Time to File US Individual Income Tax Return, can get you a six-month paperwork extension, but any taxes owed are still due on April 18.