As tax time draws near, you may have some important tax questions. There are plenty of hazards and pitfalls to watch out for as you file, and this article aims to warn you of some of the most common dangers to help you make the most of your return this year.
Get your documents in good order. While it may be tempting to submit your taxes without delay, filing before you have all the necessary documents may result in a delay in receiving your return. Therefore, it is best to take the time to verify that you have all the paperwork you need before submitting your taxes.[1] This includes the basics like knowing your social security number and the social security numbers of anyone you are claiming as a dependent, as well as any receipts you plan on using to itemize your deductions. Additionally, you may need to have some of the following documents on hand[2]:
A W-2 if you are still working.
A K-1 if you receive partnership income.
A 1099 for other income (such as dividends or interest).
A 1099-R for any retirement account distributions.
A 1098 to report mortgage interest you paid.
A W-2G if you have any gambling winnings to report.
Enter it once, check it twice. It is essential to ensure that your pertinent information is correct on your tax return. This includes the spelling of your name, address, all social security numbers, and even a bank account if you elect to receive your refund via direct deposit. Typos can lead to processing delays and misunderstanding on the part of the IRS as they seek to locate your records, and this can cost you time, money, and frustration. Make sure to go over the information you input on your return multiple times to ensure its accuracy on all[3][4]
Select the right filing type. Did you get married? Divorced? Will you finally default into a common law marriage and joint filing? Whatever your circumstances, make sure that you select the right filing type this year. This seems simple, and it is, but its also one of the most common mistakes tax filers make per the IRS. [5]
Take a break! It can be important to step away from your tax documents every now and then so that you don’t burn yourself out. It can be much harder to see errors if you’ve been staring at something for a while. So… step away, take a break, do something you like, and then take another look and ensure that your info is accurate.
Sign your documents. This may seem obvious, but a tax form is not valid without a signature, and it can be easy to forget.[6]
Accuracy is paramount when it comes to your tax documents. If you are serious about improving not only how you handle your taxes but also how you handle your finances in general, reach out to us for a complimentary review of your finances.
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