Miscalculations are one of the most common errors on tax returns. In 2017, the IRS reported 2.5 million math errors on returns. The errors range from a simple mistake on addition or subtraction or misplacement of numbers on tax tables or schedules. Thankfully, IRS software catches these mistakes but it can result in a delay of your return.
Some tax software programs automatically handle most calculations for you in order to avoid these common mistakes. Although these software programs will handle the math for you, be sure that your initial numbers are correct to ensure you are getting your full refund.
Choosing the right filing status is essential to a correct and complete tax return. The five filing statuses are as follows: single, head of household, married filing jointly, married filing separately, and qualifying widow. The filing status you choose will affect the credits and deductions you can claim, your tax bracket, and the amount of tax you pay. For example, selecting “head of household” when filing your first tax return after a divorce will be beneficial. Be aware of what each filing status entails in order to make the right choice.
Incorrect banking information
Receiving your tax return by direct deposit is usually the fastest way to get the money you are owed. If you are receiving your tax refund via direct deposit, making sure your banking information is correct is essential. A wrong account or routing number may cause you to lose your tax refund entirely.
Typically, the IRS will verify routing and account numbers before depositing a refund. If the numbers do not pass the verification check, the IRS will issue a paper check instead of direct deposit. If the return gets deposited into the wrong account, you may get stuck dealing with that issue with the bank. Always double check the account and routing numbers before submitting your tax return.
Including extra income and other important documents
Many of us may rush to file our taxes as soon as the W2 form comes in the mail. While filing early may mean getting your refund as soon as possible, you may be overlooking some important documents or additional income earned. Did you invest in stocks or cryptocurrency that yielded some extra money? Perhaps you finished paying off your student loans? Filing your taxes without these important documents could require you to amend your tax return later.
Before you file your taxes, prepare a checklist of all the things you need. Try to recall any side hustles or investments you may have made that will alter the results of your tax bill or refund. Lastly, don’t rush through the process of filing taxes for the sake of getting it done. Taking your time can save you from running into urgent issues.