Tax Day 2012 is April 17th, but don’t let those extra two days to file lull you into a sense of complacency. The time to be preparing your taxes is now. Procrastination leads to last-minute rushing, and rushing leads to mistakes on your tax form.
Whether you prepare your taxes by hand, use tax software or hire a licensed professional or expert, make sure to avoid these 6 common mistakes that can delay your refund, lead to fines or even result in an audit:
1. Technical Errors
It may seem obvious, but thousands of people each year have their returns rejected because they failed to use their official name, provided the wrong social security number, forgot to sign and date the tax form or didn’t attach a copy of their W-2 report.
2. Improper Status
Have you recently gotten married? Are you filing jointly with your spouse or separately? What about dependents? Do you know how to claim your children on your return? If you have questions about your filing status, visit the IRS website, www.irs.gov or speak to a tax professional.
3. Bad Math
Although the use of tax preparation software has made it easier to avoid mathematical mistakes, they can still occur if you enter the wrong digits or put a number in the wrong place. If you still go “old school” and prepare your return by hand, make sure to use a calculator and double check your work.
4. Forgetting Income
Don’t assume that your W-2 reports all the income you earned last year. If you performed any freelance work as an independent contractor, you probably received a 1099 form showing how much you made. But even if you did not receive a 1099 – and there are cases where they are not required – you still need to report all income you earned. Also, if you changed employers mid-year, make sure you have W-2 forms from both of them.
5. Deduction Mistakes
It can be tempting to try to find tax deductions everywhere, but only certain activities are actually deductible. That new juicer is not a business expense just because you drink the juice that you made while you work in your home office, and the time you spent chairing the school carnival is not deductible even though you make your living as an event planner.
At the same time, don’t shortchange yourself by failing to keep track of truly deductible activities. If you drive a lot for work, you must record your exact mileage (2012 mileage rates) in order to claim a deduction. The same goes for charitable donations. You need proof of any donated amount above $200, so make sure you print out a receipt if you make a donation on-line and retain the thank you letters that charities send you.
6. Not Filing At All
It goes without saying that the biggest mistake you can make when filing your taxes is to not file at all. If you really cannot meet the April 17th deadline, it is much better to ask the IRS for an extension than to fail to file completely.
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