1. Don’t check your math. While most people use software these days, some taxpayers still do their forms 1040 (and 1040-EZ) by hand and math errors are the top mistake that taxpayers make. What you might not know is that the IRS has a staff of “checkers” who basically doublecheck your math. If your numbers don’t add up, your return gets pulled.
2. Omit your Social Security number (or those of your dependents). You must have a valid Social Security number (or other valid tax ID number) in order to claim yourself or your dependents on your return.
3. Use the wrong Social Security number. See #2 above. If you have questions about your number, contact the Social Security Administration.
4. Claim an ineligible dependent. In a divorce, parties usually agree ahead of time on who will properly claim the children in each tax year. But sometimes, those details don’t get worked out and both parties claim the child as a dependent; this isn’t allowable and will result in a refusal for the exemption for the last party to file. Similarly, sometimes college students will file as independent and will also be claimed by their parents – this isn’t allowed either and will result in a refusal for the last party to file. However, if it’s not a mistake and you’re just making up dependents for purposes of claiming extra exemptions, you’re just begging for criminal prosecution.
5. Check more than one filing status. Your choices are single, married filing jointly, married filing single or head of household. You can’t be more than one of these in a single tax year.
6. Fail to include income listed on a form 1099, W-2 or other document. This includes dividend and interest paid out by banks and financial institutions. Here’s a tip: those forms are not just mailed to you, they are also sent to the IRS. The IRS expects you to include that income on your 1040. If you report a different amount, you will eventually receive a nice letter from the IRS with a note that your return has been adjusted.
7. Claim deductions for business expenses – when you don’t have a business. You’d be amazed how often this happens. Business expenses are listed on a Schedule C and are matched up with business income. If you are simply taking a deduction for unreimbursed job expenses, you report those as miscellaneous expenses on Schedule A. Sometimes it doesn’t matter where you put your deductions but in this instance, it does. Schedule A miscellaneous expenses are subject to a 2% limit while Schedule C expenses are not.
8. Choose not to properly document your charitable deductions. The IRS is cracking down on improper charitable deductions – you must now keep receipts for all donations of cash or cash equivalent and clearly document non-cash donations. If the donation is something that you created, the rules are even more stringent. So include the proper documentation, where necessary, with your return (receipts may not be necessary but additional forms and appraisals may be) and use some common sense.
9. Don’t sign your return. Believe it or not, this is one of the top filing mistakes. You must sign your return and if filing jointly, your spouse must file the return.