8 mistakes to avoid when filing tax returns
Every year people tend to rush to file income tax returns as the financial year stats converge. The Internal Revenue Service (IRS) has a specific set of guidelines that ensures the filing process is easy for individuals to understand and file quickly. But many people tend to make mistakes on their forms which can lead to the income tax department rejecting the document. Therefore, here are eight mistakes to avoid when filing income tax returns.
Premature filing
Getting things done earlier than the deadline isn’t always simple while filing taxes. Institutions and organizations that issue the latest tax forms may send them later than usual. They may even send an updated version of the document a few weeks after the original is sent. If one files for taxes prematurely, they may risk missing out on any such changes in the documentation, which may lead to a rejection or delay in the returns process.
Wrong tax filing status
There are five tax filing status types: head of household, married filing jointly, qualified widow(er), married filing separately, and single. Unfortunately, several individuals pick the wrong one while filing the forms, which may affect their return. The tax filing process determines several factors, including the amount of standard deduction you are entitled to (if you are not itemizing) and the respective tax credits and deductions forms. Therefore, ensure you pick the right status when filing for tax returns.
Delaying submissions
A delayed tax submission might be susceptible to additional fees. The penalty levied on documents that are submitted late may rise to about 5% of the tax amount due for each month that the individual delays the paperwork. Moreover, the penalty percentage may also increase with respect to the time one takes to file tax returns. If you miss the deadline, there’s still hope. Instead of doing nothing, you could request an extension by filling out and submitting Form 4868. Turning this document in before the tax deadline should get you an extension to file your taxes.
Incorrect social security number
Typing in the wrong Social Security number is one of the easiest mistakes while filing tax returns. The IRS uses these digits to verify the information submitted by an employee. The details are then cross-verified against the information provided by the bank, employer, and other establishments. So even though you might have all the details filled in perfectly, a single error in the Social Security number may hamper your income tax returns.
Calculation errors
Mathematical errors are one of the most common mistakes made while filing taxes. These could range from simple addition or subtraction to more complex calculations. So one must always check the math before submitting tax return documents. They should also avoid mistakes while assessing credits and deductions, including earned income tax credits, child tax credits, and child and dependent care credits.
Wrong bank account number
An individual has other options for receiving their tax returns. But a direct deposit is usually the preferred choice because of the significantly lower time it takes for a successful transaction. Unfortunately, this is another place where people make mistakes and type in the incorrect bank account number. While the money sent to an incorrect account is usually rerouted to the source account, the incident may delay one’s tax returns.
Name mismatch
An individual should also be mindful of the name they enter while filing for tax returns. Taxpayer and dependent names listed on the return should match the ones printed on the respective Social Security cards. Furthermore, if you have changed your name, ensure the Social Security Administration is informed of the update. You could also contact the IRS over the phone to correct the spelling.
Failure to verify tax returns
E-filing has turned into a more prominent method of filing taxes. But as easy as it seems, people often forget to add a digital signature and authorize the filed returns once the documents are uploaded to the IRS. Since verification is a way for the tax department to authenticate the document, not doing so may lead to the rejection of your claim. Therefore, ensure the returns are e-signed and verified once you have uploaded the essential documents. If you prefer submitting documents physically, ensure they are signed and verified by a financial expert before you hand in the paperwork.
