Tax Season is upon us again, and millions of Americans may put off filing until just before the April 15 deadline. Government cutbacks over the past few years have resulted in a number of layoffs of IRS agents, and subsequently, the number of tax audits has been falling, but don’t be fooled into thinking “I’ll never get audited.” Roughly one million Americans will be audited this coming year[1]. These audits do not include filers whose returns were sent back for mistakes.
There are a number of common pitfalls to avoid during tax season. The IRS lists several common errors filers make each year on its website. The errors vary in complexity, from failing to correctly calculate a deduction on a 1090A form to simply forgetting to sign and date the tax return, or even using the wrong postage. While some of these mistakes seem obvious and easily avoidable, they are frequent enough that the IRS lists them as issues.
The IRS has identified the eight most common tax return errors that they see at tax time. The most common tax-filing errors to avoid are:
- Wrong or Missing Social Security Numbers. Transposing numbers is a simple mistake of typing faster than you think. Make sure you enter the correct numbers and then double-check
- Wrong Names. It’s not likely that you’ll spell your own name wrong. However, you’d be surprised at how many taxpayers misspell the names of their spouse and/or dependents. It’s recommended the names on the tax return match the names as they appear on their Social Security cards.
- Filing Status Errors. It’s important to choose the right filing status. There are five filing statuses to choose from when completing your tax return: Single, Married Filing Jointly, Married Filing Separately, Head of Household, and Qualifying Widow(er) With Dependent Child. Each of these statuses has a specific definition for tax purposes. You must select the one most appropriate for your situation. Learn more about filing statuses from the IRS.
- Math Mistakes. Double-check your math before filing your return, as this is one of the first things the IRS checks on a tax return. In particular, they verify the figures on the first two pages of your tax return to ensure they add up. One advantage of using tax preparation software (or a tax professional) is that you don't have to do the math on your own.
- Errors in Calculating Tax Credits or Deductions. There are a number of credits and deductions available to taxpayers and many can be overwhelming. Do the necessary research to ensure you understand the deductions and credits you file on your tax return. The most common of these errors are: figuring the Earned Income Tax Credit, the Child and Dependent Care Credit, and the standard deduction.
- Incorrect Bank Account Numbers. If you e-file, you are required to use direct deposit. It’s the fastest and easiest way to file and get your potential refund back in only a few weeks. However, it’s only fast and easy if you provide the correct bank and account information. Double-check your entries.
- Forms Not Signed or Dated. One of the most common mistakes that seems to happen year after year is forgetting to sign the tax return. This is easily overlooked, especially if you are filing late and in a hurry to get the return in the mail on time. A return is considered timely filed only when it is properly signed and submitted.
- Electronic Filing PIN Errors. Don’t think that signing mistakes can only happen with 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 five-number PIN when you e-file; you may also use your prior PIN if you e-filed last year. Finally, don't confuse your e-filing PIN with an IP PIN.
Taxes are hard enough. Dodge these common mistakes to avoid having to rehash them down the road. A few extra minutes today could save you hours, and potentially thousands of dollars, in the future. Keep in mind that mistakes in your tax return may delay your refund (if you’re eligible for one). We are not tax experts and suggest that you contact a tax advisor to ensure your tax forms are completed correctly.
