This Is How to Avoid Making a Mess of Your Taxes Next April

Written by | Lifestyle

Tax Time Advice

(Stock image Copyright: Tharakorn Arunothai)

The U.S. tax code is nearly 4 million words. That’s a lot of complicated legal jargon that most people don’t really want to read. However, even though the rules are complex, most of the mistakes LGBTQ taxpayers make on their returns are fairly simple. Here are 10 of the most common errors taxpayers make:

Not Filing on Time

The IRS estimates a full 20 percent of taxpayers wait until a week before the deadline to file their income tax returns. Unfortunately, waiting until the last minute can also force some procrastinators to miss the deadline entirely if they happen to run into any problems while completing their forms.

Sure, filing for an extension can give you more time, but you still need to pay any taxes owed by the original deadline, which is April 15, 2020 for tax year 2019. And if you don’t make that payment by the due date, the IRS will charge you interest.

Missing or Incorrect Information

One of the more common tax filing mistakes is leaving a box blank or screwing up your own Social Security number. The easiest way to avoid those mistakes is to import info from last year’s return so you don’t risk creating a typo when keying in your information.

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Math Errors

Formulas used in tax forms are notoriously tricky — i.e.  “Add line 8 to line 32 and multiply by .356 if your AGI is greater than $50,000.” Excuse me: What?? Save yourself a headache and use tax preparation software like TurboTax that will make the calculations for you.

Falling Behind on the Latest Tax News

Not only is the tax code complicated, but Congress changes it a little every year. The tax reform at the end of 2017 was the largest overhaul of the tax code in 30 years. That amount of change can feel overwhelming for some. Make sure to consult the IRS news page for important updates so you don’t miss out on valuable deductions and credits (or attempt to claim a benefit that no longer exists).

Not Keeping a Copy of Your Return

Tax experts recommend keeping a copy of your tax return for at least three years. That’s how long the IRS can legally audit you for a gross under-reporting of income.

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Inaccurate Account Numbers

You should always double-check your bank account and routing numbers if you prefer your refund direct deposited or if you’re making an electronic tax payment. Entering incorrect information can delay your refund or result in penalties and interest on late payments.

Missing a Tax Break

While the IRS isn’t famous for its generosity, there are a number of tax credits and exemptions available – especially to families and students. Credits like the Child Tax Credit can lower your tax bill by as much as $2,000, so make sure you don’t miss out if you qualify.

In addition, make sure you think twice before deciding to take the standard deduction. Homeowners in particular should itemize their biggest deductions to see if they add up to more than the standard.

Filing the Wrong Tax Forms

The IRS now provides a single income tax form for all filers to complete regardless of their tax situation. That’s Form 1040. Forms 1040A and 1040EZ were eliminated starting with tax year 2018. The revision of Form 1040 also brought with it six new schedules. If you own a business and need to report profits and losses, you’ll still need to complete Schedule C.

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Filing Under the Wrong Status

The IRS applies different income tax rates – and it awards different standard deductions – according to your filing status: single, married filing jointly, married filing separately, head of household or qualifying widow(er). Married couples filing jointly, for example, are entitled to twice the standard deduction of single filers.

Also note that married couples filing separately are subject to different rules than joint filers. For instance, if you file separately, both spouses need to claim either the standard or itemized deductions – not one of each.

Not Filing at All

Even if you can’t pay your full tax bill at the time it’s due, file a return and contact the IRS to start an installment payment plan. The interest rates are low, and it’s far better than ignoring the law and failing to file, which can result in penalties and potential tax evasion charges.

Remember as Benjamin Franklin said, “In this world nothing can be said to be certain, except death and taxes.” So remember: keep your receipts, consider filing as soon as you have the necessary documents for the previous year, and to file before April 15th. It’ll be here before you know it.    

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Last modified: October 2, 2019