5 Horrible Mistakes You’re Making With Your Tax Preparation
Preparing your taxes is a complicated, time-consuming process. Despite your best efforts to calculate your taxes properly, it is easy to make a simple mistake. One small mistake on your taxes can lead to serious fines from the IRS. Here are five common horrible mistakes that can happen with tax preparation.
If you miscalculate anything on your tax return, it will cost you. Mistakes cost you money tax refunds, or it can force you to pay more. Another concern is failing to pay adequately and getting hit with back taxes. The IRS is double-checking your math against W-2s, 1099s, and other income statements. If you made a mistake, the IRS will let you know, and they will correct your mistake.
A common mistake we see on tax returns is incorrect spelling. Misspelled words in your business expenses section can cause a red flag to appear. You need to have the right tax identification number matching the Social Security Administration records.
Inputting Incorrect Numbers
Double check every number you enter into your taxes. Many people will opt for direct deposit from the IRS. When you input your bank numbers on the return, double-check the return to make sure everything is correct. Analyze the social security numbers on the return to ensure they are correct.
If you have picked up extra work as a contractor, you will receive a 1099-MISC. The 1099s can become complicated, and you are required to pay the full tax amount as employers hire you as a contract employee. The IRS knows how much money you make from these 1099 jobs, and they will tax you immediately if you fail to include them.
Are you giving money or items to charity? You need to keep records of donations as they can impact tax deductions. The IRS requires all items including clothing be in good or better condition if you plan to deduct it from your taxes