While tax laws are complicated, the most common tax return errors are simple, including misspellings and missing information. Mistakes can delay refunds or prompt a letter of inquiry from the IRS.
Have Complete Paperwork
Taxpayers should be sure to collect all key documents, such as Forms W-2 or 1099 for income received, as well as any supporting paperwork for tax deductions or credits like education credits or mortgage interest payments. Consulting the previous year’s tax return will help identify documents that are likely to be needed in the current year as well.
Electronic Filing
Electronic filing minimizes mathematical errors. The tax software does the math, flags common errors and prompts taxpayers for missing information. It can also help taxpayers by identifying potential tax credits or deductions for which they qualify.
Direct Deposit
Direct deposit to a bank account is the fastest and safest way to receive a refund. Be sure your bank’s routing number and your account number are correct to avoid delays or misdirected refunds.
Filing Status
Your filing status can change after a major life event such as getting married or moving away from your parents’ home. Generally, filing status is based on your marital status on the last day of the year. The filing options are:
• Single – If you’re unmarried, divorced or legally separated.
• Married filing jointly – If you’re married or if your spouse passed away during the year.
• Married filing separately – If you’re married and don’t want to file jointly or find that filing separately lowers your tax liability. Most couples save money by filing jointly.
• Head of household – If you’re single and you paid more than half of your living expenses for yourself and a qualifying dependent.
• Qualifying surviving spouse – If your spouse died during the past 2 years and you have a dependent child.
Names, Birthdates and Social Security Numbers
Taxpayers should confirm that their names, dates of birth and Social Security numbers (SSN) are listed correctly, as well as those of any dependents. The SSN and individual’s name should be entered precisely as indicated on the Social Security card. In cases where a dependent or spouse lacks an SSN and is ineligible to obtain one, an individual tax identification number (ITIN) provided by the IRS should be listed instead of an SSN.
Digital Assets Question
Tax reporting Forms 1040, 1040-SR, 1040-NR, 1041, 1065, 1120 and 1120S all contain this question below about digital assets, requiring a “yes” or “no” answer:
“At any time during the tax year, did you: (a) receive (as a reward, award or payment for property or services); or (b) sell, exchange, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?”
The question must be answered by all taxpayers, not just by those who engaged in these transactions involving digital assets.
Sign and Date the Return
Taxpayers are required to sign and date tax returns submitted on paper. When submitting a joint return, both spouses must sign and date.
If a CPA or other tax preparer is filing your return electronically, they will require you to sign a Form 8879 before filing. If taxpayers are preparing their own tax returns and filing electronically, they can sign and authenticate their electronic tax return by inputting their adjusted gross income (AGI) from the prior year.
Address
Be sure your mailing address is listed correctly, especially if you submit a paper tax return or ask for your tax refund to be mailed to you.
Keep Copies
Copies kept either on paper or digitally can be helpful in preparing future tax returns or filing an amended return. Typically, taxpayers should retain records supporting income, deductions or credits claimed on their tax returns until the period of limitations for that specific tax return expires.
Extensions
Taxpayers requiring more time to file their taxes can request a six-month extension until October 15, enabling them to avoiding late filing penalties. While the extension provides extra time for final filing, tax payments are still due on April 15 for most taxpayers. Taxpayers seeking an extension can avoid or reduce penalties by making full or partial payment of their estimated income tax by April 15.
Tax Preparers
Using a reputable tax preparer, including a certified public accountant, enrolled agent or other knowledgeable tax professional, can also help avoid errors as well as help taxpayers claim valuable credits and deductions.
If you have questions about this featured topic or other accounting and tax related topics, please do not hesitate to contact us at 727-327-1999 OR info@accpas.com.
ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.
