Trouble Taxes: Top 10 Mistakes Made on a Tax Return

Chad Silver

Chad Silver

Managing Partner of Silver Tax Group, author of the book "Stop the IRS". Practicing a variety of tax issues, regulations, laws and rights. Specializing exclusively on tax matters involving IRS audits, negotiation, settlements & compromises.

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Trouble taxes are a major issue for many people. In fact, in 2016 alone, the IRS audited more than 1 million people for issues on their personal tax returns.

With taxes being so complicated, it’s easy to make mistakes. But some are more common than others.

Luckily, this means you can avoid them with the right amount of preparation and dedication.

You just need to know what to watch for. Here are some of the most common issues and what you can do to make sure they don’t happen on your return.

1. Misspelling Names and Addresses

You know how to spell your name and your address. But mistakes can and do happen. Unfortunately, making those mistakes on your taxes can earn you a letter from the IRS.

Misspelled names, addresses, or even using a maiden name instead of a married name by mistake all impact your tax return. If the information isn’t accurate, the IRS can’t process your return and has to send it back to you for corrections.

When filing your taxes, double check the spelling on each form. Make sure the names and spellings match those on your Social Security card. If not, correct it before you send them in.

2. Missing Information

Missing information on forms is just as bad as misspelling your name. It makes the return almost impossible for the IRS to process accurately. And it will result in delays and possibly even audits.

Before you send in your return, make sure you’ve filled everything out. If you’re missing a W-2 or another earned income statement, speak with your employer and have the documents reissued.

3. Filing Too Late

People dread April 15th for a reason: it’s the deadline for filing your taxes. And everyone has to file by that deadline unless they petition for an extension.

Unfortunately, the IRS assesses a fine if you fail to file your return on time. For most taxpayers, the fine is about 5 percent of your unpaid taxes, but it will be more the longer you wait to file.

The best way to avoid that fine is to pay on time every time. Make sure you have everything in the mail by April 15th at the very latest.

4. Filing with the Wrong Form

Filing your taxes isn’t usually a “fill out a single form” process. It requires supplemental forms and documentation, all of which can seem confusing.

That’s why many people accidentally file their taxes with the wrong form. Unfortunately, doing so causes a huge delay in processing your return. You’ll likely need to refile with the correct forms, pushing the timeframe back even further.

The best way to avoid using the wrong form is to work with an accountant. They’ll make sure you use the right forms every time, whether you’re filing for yourself or a business.

5. Claiming Deductions You Don’t Qualify For

Deductions help reduce your tax liability or the amount you owe at the end of the year. The more deductions you claim, the lower your tax bill will be.

But claiming deductions that you don’t qualify for is one of the worst mistakes you can make. The IRS will notice and they’ll demand corrections.

Only claim the deductions you qualify for. If you’re not sure, speak with a tax professional or avoid claiming it altogether.

6. Not Reporting Your Full Income

It may seem like you only have to report the income reflected on your W-2s or any 1099-MISC forms you receive. But that’s not the case.

You’re expected to report all income earned during the year. This includes tips, casino winnings, and earnings from freelance work even if you don’t pay self-employment taxes on it.

Missing these payments can earn you additional fees and penalties on top of any taxes owed on that unreported income.

7. Filing Under the Wrong Status

Old habits die hard. Maybe you’ve recently gotten divorced and forgot to file singly. The IRS will notice and will expect you to pay the higher tax rate.

Similarly, if you’ve just gotten married and forget that you can file jointly, you’ll end up paying more in taxes for the year. But don’t worry—you won’t get an angry letter from the IRS for this mistake. You’ll just get a higher tax bill.

8. Forgetting to Sign the Forms

The average person spends about 8 hours preparing their taxes. That’s a lot of time split over several days. Mistakes are bound to happen.

Believe it or not, one of the top mistakes tax filers make is forgetting to sign and date the forms. If the tax forms aren’t signed, the IRS can’t accept them. This is true even if everything else is accurate.

Before moving onto the next form, take the time to check for any signature boxes. If you see one, fill it out and then move on. This may add a bit of time but it will save you in the end.

9. Inaccurate Calculations

Taxes and math go hand in hand. But because you’re dealing with so many numbers, it’s easy to make a mistake.

Those mistakes can be costly. You might end up paying more than you owe or missing out on a deduction because your income was just slightly too high.

When in doubt, double check your work. Run the numbers at least twice and see if they add up the same.

You can always spare yourself the headache by using a tax preparation software or working with a pro who can handle the addition for you.

10. Not Filing at All

Almost everyone has to file taxes. The IRS will notice if you don’t, but it might take them a few months or years.

When that happens, you’ll not only owe the original amount, but you’ll also have to pay interest fees, penalties, and fines.

Always file your taxes. Even if you have to file them late, you’ll end up paying less in fines than skipping whole years.

Avoid Trouble Taxes in the First Place

Trouble taxes can put a strain on your finances. Now that you know the most common mistakes, you should be able to avoid issues in the future with ease.

If something does happen and you find yourself owing the IRS a lot of money, don’t panic. You don’t have to go through it alone. Contact our team and let us represent your case with the IRS.

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