It’s that time again. Income tax time, that is. And whether you’re planning to file online or by mail; whether you’re going to a tax professional or taking the DIY approach, it’s important to be on the lookout for errors. I’m not talking about big mistakes, either. Even a small thing like forgetting to put the date on your tax return can spell IRS trouble.
Here’s a list of five common mistakes that people make when filing their taxes – and how to avoid them.
Mistake 1: Forgetting to sign and date your tax return
This is a small mistake, but it could have huge consequences. It doesn’t matter how many times you’ve checked and double-checked your tax return form. It doesn’t matter that you did a great job of keeping every receipt, or that you’re finished with your taxes a month early. If you forget to sign and date your tax return, you technically didn’t file your tax return. Before you submit your tax return, make it a point to double- and even triple-check to make sure you have signed and dated it. If you’re married and filing jointly, make sure both of you have signed.
Mistake 2: Losing track of receipts
If you want to deduct things like charitable contributions, medical expenses, or business expenses, you’ll need to make sure you have dated receipts that back up your claims – in the event of an audit, you’ll need proof that your deductions are legitimate. If you can’t prove it, it might look like you’re trying to put one over on the IRS. My advice is, if you can’t prove it, don’t deduct it. Want to make sure you’re prepared for next year? Collect all of your receipts in an envelope, and keep them someplace safe. When tax time rolls around, you won’t have to tear the house apart looking for proof of that business trip or donation.
Mistake 3: Claiming the wrong marital status
Your marital status for your tax return should reflect what your marital status was last year – meaning, if you were single through December 31, 2011 you should file single – even if you got married since then. On the other hand, if you were married last year but aren’t now, you should still file married. Mistakes like this can change your eligibility for certain types of tax credits. Form 1040 has some detailed instructions about how to choose your marital status – it’s a good idea to read this section thoroughly if you’ve had a recent change in marital status.
Mistake 4: Not checking your bank account number
One of the great things about filing online is that you have the option to get your tax refund deposited directly into your bank account. One of the not-so-great things about this option? If you make a mistake – say, if you write down the wrong account number or routing number, your refund could end up in limbo until the mistake gets corrected. If you’re opting for direct deposit, make sure you check your account number several times.
Mistake 5: Paying income taxes with plastic
Nobody wants to owe money at tax time – but if you find yourself owing the IRS this year, don’t use a credit card to pay your taxes. If you’re already in debt, you’re just adding to an existing problem. But even if you’re not in debt, there are still good reasons to pay cash: The IRS will charge you an extra 2.5 percent for paying with a credit card. Pay cash – no exceptions. If you don’t think you can pay the whole amount you owe, talk to the IRS about setting up a payment plan.