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Posted in Personal Finance

Avoid Making These Common Tax Mistakes

Avoid Making These Common Tax Mistakes

There’s probably not another day in the year that’s as stressful as April 15th – tax day. Nobody likes paying their taxes and pretty much everyone gets nervous when it comes time to pay them. Paying your taxes can be a complicated process, and paying them improperly can result in fines. Because the tax paying process can be so overwhelming, it can be easy to make mistakes. Use the following tax tips to help avoid making common tax mistakes:

Paying your taxes late

Be mindful of the April 15th deadline when it comes to paying your taxes. Begin gathering your W-2s and all of your receipts and financial records ahead of time so that you don’t end up trying to do your tax forms at the last minute. Paying your taxes late can not only result in you having to pay the IRS interest but also in you having to pay a fine.

Not filling your tax forms

Some people may decide not to file their taxes because they know they won’t be able to afford to pay them. This is a huge mistake. First of all, if you were due a refund you’ll simply be losing money. If you owe money, then you’ll be charged interest and fines. If you can’t afford what you owe, the IRS will set up an installment plan for you.

Not doing the math correctly

Always double and triple check your math – use a calculator! The IRS will check the math on your returns, which means that if you have made any errors that result in you owing more money, you may incur additional interest payments. If the IRS claims you did your math wrong, be sure to check their math as well – they have been known to make a few errors from time to time too.

Not filling out your information correctly

When filling out your information, from your social security number to your routing information, double and triple check to make sure that these numbers are not only correct but legible as well. Illegible writing, incomplete information or wrong information can lead to a substantial delay in processing your tax returns.

Not keeping copies of previous tax returns

Always keep copies of your tax returns in a safe place. If you have made a mistake on a previous return, you can actually file an amended tax return in order to receive a larger refund.

Filing the wrong forms

There are two basic tax forms that you can use to do your tax returns. The 1040EZ is the easiest form to fill out, resulting in faster processing, which means you’ll get your tax return more quickly. However, form 1040, which is the longest and most complicated of the tax forms, provides more flexibility to do things such as reflect self-employment income or itemize your tax deductions. If you use the 1040EZ form simply for the sake of saving time and making it easy, you could be losing out on potential deductions.

Not taking advantage of tax breaks

It’s surprising how many Americans overpay on their taxes every year because they are not taking advantage of tax breaks and deductions. Remember that you can deduct certain costs from your taxes, such as mortgage interest, charitable donations, medical expenses and more. Depending on your income, you may even qualify for a $1,000 credit if you have children. These deductions will help to lower your taxable income, which means that you’ll be paying less money in taxes.

Use these tax tips to avoid making mistakes when filing your taxes this year. It will help you better prepare for another tax season.

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