We all make mistakes. It’s especially easy to make mistakes at tax time because you’re feeling rushed and sometimes, a bit overwhelmed. It happens.
The Internal Revenue Service has identified eight of the most common mistakes taxpayers make when filing returns. Here’s the rundown:
- Wrong or missing Social Security numbers. Transposing numbers can be as simple as typing faster than you think. And attempting to recall Social Security number for your kids (I’ll be honest: I don’t know my kids’ Socials by heart) can result in mistakes. Make sure you enter the correct numbers and then double-check them against your Social Security card.
- Names wrong or misspelled. It’s not terribly likely that you’ll get your own name wrong – but you’d be surprised at how many taxpayers misspell the names of their spouse and/or dependent. It’s not always on purpose: the names on the return should match the names as they appear on your Social Security card. Sometimes, there is an error on the card which means that when you enter the “right” name on your tax return, it will conflict with the information in the IRS’ system. Use the name which appears on your Social Security card and if that number is wrong, fix it.
- Filing status errors. It’s important to choose the right filing status. There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er) With Dependent Child. Each has a specific definition for tax purposes: you need to select the one most appropriate for your circumstances. Remember that marital status is determined by state law on the last day of the tax year (December 31) no matter what your status was for the remainder of the year. So if you’re married, you’re married. You can’t file as single because you feel single. And so on.
- Math mistakes. One of the first things that the IRS checks on a return is the math. In particular, the figures on those first two pages of your tax return need to add up. If you file a paper tax return, it’s easy to miss a number or two, so go slowly and double-check your math. One advantage of filing electronically is that the software does the math for you.
- Errors in figuring credits, deductions. The number of credits and deductions available to taxpayers can be overwhelming. Sometimes, it may appear that a credit or deduction might be appropriate when, in fact, you’re phased out or otherwise restricted from making the claim (for example, you’ve already claimed the tuition and fees deduction for the same payment that you attempt to use the American Opportunity Tax Credit). If you aren’t sure about a credit or deduction, read the instructions on the form carefully or check with your tax professional.
- Wrong bank account numbers. If you e-file and you use direct deposit, you can get your refund back in a few weeks. It’s fast and easy. But it’s only fast and easy if you provide the right information. Make sure you enter your bank routing and account numbers correctly. If you need help figuring it out, ask your bank.
- Forms not signed, dated. Sometimes in the rush to get the return in the mail, you forget to sign the return – that’s actually a common mistake cited by IRS year after year. This is one case where a mistake isn’t exactly just a mistake since an unsigned tax return is an invalid return. A return is only considered timely filed if properly signed and submitted. Keep in mind that if there is a joint return, both spouses must sign the return in order for it to be valid.
- Electronic signature errors. And don’t think that signing mistakes can be restricted to paper returns: e-filed tax returns also require a signature in the form of a Personal Identification Number (PIN). You’ll be asked to select a PIN when e-file; you may also use your prior PIN if you e-filed last year.
So now that you know the most common mistakes, how do you avoid them?
- Plan ahead so that you have the right information available. That includes Social Security numbers for your spouse and dependents and last year’s tax returns.
- Slow down. Most mistakes happen because taxpayers are rushing to get returns done. There’s no fire – and worst-case scenario, you can ask for an automatic extension. It’s better to file a thoughtful, complete, and correct return on an extension than a thoughtless, sloppy, mistake-riddled return by April 15.
- Read the instructions. If you aren’t sure about how to file out a schedule or a form, chances are that the IRS has a publication or instruction booklet that can help.
- Be neat. I constantly tell my kids that it doesn’t matter if they have the right answer if the teacher can’t read it. Ditto for the IRS. If the representative can’t read your return, it’s wrong.
- Check your work. You can catch most mistakes by double-checking your math, looking for signatures, and checking to make sure that you’ve attached the correct schedules and forms.
Again, mistakes happen. If you take a few moments to slow down and check your work, you can prevent a lot of these errors. That said, if you file and you realize that you’ve made one of these mistakes, don’t freak out. Mistakes can be fixed.
