01 Mar 5 Mistakes You Don’t Want to Make This Tax Season
You don’t want to make any mistakes this tax season but here are 5 to look out for.
Taxpayers must file their income taxes to the IRS every year. Whether you are new to filing or this isn’t your first time filing, these are the five common mistakes that you don’t want to make this tax season:
Choosing the Wrong Filing Status
When it comes to filing taxes and choosing your filing status, you have five options:
- Head of household
- Married filing jointly
- Married filing separately
- Qualifying widow or widower
It is important to select the correct filing status for your situation to determine your filing requirements, standard deduction, eligibility for certain write-offs, and your correct tax.
People make mistakes, it’s a part of life. However, you do not want to make any mistakes on your tax refund. The most common miscalculations seen on tax refunds are related to their taxable income, withholding and estimated tax payments, the Earned Income Tax Credit, the Child and Dependent Care Credit, the standard deduction for age 65 and older or blind, and taxable amounts of Social Security benefits.
Not Reporting All Your Income
Not reporting all the income you earn will most likely end in the IRS finding out. If you don’t report all your taxable income, you could face criminal prosecution or a civil lawsuit to collect taxes on undeclared income. You could also end up owing interest and penalties. It’s not a good idea to do it so just don’t do it.
Claiming Deductions You Are Not Entitled To
Claiming deductions and credits you are not entitled to could get you audited by the IRS. If this happens, you could owe back taxes, interest, and penalties. There are certain deductions that are more likely to be flagged by the IRS, such as deductions for business travel and entertainment, deductions for charitable contributions that seem unusually high, and deductions for a vehicle for business use.
Not Claiming Deductions You Are Owed
It is no secret that deductions and credits can greatly reduce your tax bill. By not claiming deductions and credits you are entitled to, you may potentially end up with a tax bill thousands of dollars higher than what it should be. Our accountants at Schultz & Associates are here to help you figure out the deductions and credits you are eligible for.