8 Common Tax Return Mistakes Made By Smart People
Making mistakes with tax returns is not uncommon since the process of filing is complicated and sorting out taxes for one financial year takes a lot of calculations. It comes as no surprise that most people take the help of tax experts to file their taxes to avoid any issues with the IRS. However, errors may occur while filing returns despite taking precautions. Here are some of the common mistakes that may occur during tax filing.
- Waiting until the last minute: Waiting until the last minute to pay taxes leads to a delay in refunds. According to the IRS, almost one-third of Americans wait until the very last minute to file their tax returns.
This last-minute filing leads to late processing and results in delayed tax refunds. Filing returns on papers: It has been proven that taxpayers who file their taxes on paper make more mistakes as compared to individuals who go for e-filing. Calculation mistakes are also commonplace in worksheets that have to be attached to the tax form. Hence, the IRS recommends taxpayers to file their taxes online and avoid delays in the processing of refunds.
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- Making calculation mistakes online: People tend to make mistakes even when they file tax return forms online.
Some numbers need to be typed in for calculations and making typos will lead to errors in the information provided on the tax forms. People need to be very careful when they are entering details in order to avoid errors and miscalculations. This may cause a further delay in the processing of tax refunds. Mistakes in names: Tax forms have to be filled accurately with all the details such as names and Social Security Number (SSN). Any errors or typos in entering these details will lead to rejection of the form or a delay in the process. This is one of the most common mistakes people make while filing tax returns. Forgetting to sign: An unsigned tax return form is considered invalid by the IRS. Every year thousands of tax returns are rejected because they are not signed. Forgetting to sign the forms is another common mistake made during the filing of tax returns. Failing to ask for an extension: Failing to pay taxes on time results in a penalty. However, if you provide a valid reason for missing the payment deadline, the IRS may extend your tax deadline. Most people do not know about this and hence, do not ask for deadline extensions. Paying for tax filing: A number of people hire a professional to file taxes but this process is free for some individuals such as people with disabilities, senior citizens, and students. People are generally not aware of this and end up paying a lot of money for filing. Not filing taxes when living and working abroad: An American citizen living abroad has to pay taxes in the US on time. Failing to do so leads to heavy penalties. Many American working and living overseas are not aware of this rule and end up paying unnecessary penalties.
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