6 Common Mistakes to Avoid While Filing Your Taxes in 2022
Although the IRS is trying its best to simplify the tax filing procedure, it is still complicated for many out there given that Congress tweaks the tax rules almost every year. There are over 1,000 forms along with complicated terms like itemized deductions, tax credits, schedule attachments, and more. Anyone is bound to make a mistake and that might cost you precious dollars. In the best care scenario, you end up paying more taxes than you need to while in the worst, you pay a penalty to the IRS.
To keep you away from such situations, we list the 6 common mistakes taxpayers generally make during the tax season. Take note and file your taxes flawlessly.
1. Filling out the wrong form
Or, not filing the required form at all. For example, you must always start with the basic 1040 Form. Form 1040EZ is no longer accepted post-2018 and you cannot use the photocopy you have saved from then or download it from an outdated website. Similarly, you might feel that filling out Form 1099-MISC is enough to report your interest payments and in the process, forget to attach Schedule B and lose out from benefiting from the $1,500 deductible. Filling the wrong Form is the most common mistake that taxpayers make every year.
2. Filling inaccurate details
One of the leading causes why eligible taxpayers do not receive their tax refunds is that they fill out their bank account details wrong. The IRS also reports that a majority of the documents they receive have inaccurate Social Security numbers filled out along with a variety of other mistakes. Making mistakes while entering your details only delays your tax processing. You also run the risk of losing your tax refund because you entered someone else’s bank account details.
3. Missing tax credit opportunities
The IRS offers a host of tax breaks and most taxpayers stay oblivious to the types available. Itemized deductions are the most common tax breaks that people forget to report. Other common tax breaks that people do not utilize include Child Tax Credit, Business Expense Deductions, and so on. This is how you report a higher taxable income than what you should have and end up paying more in taxes every year.
4. Getting the mathematical formulas wrong
Even if you are math savvy, the IRS formulas might seem a bit complicated. The IRS does not mention the formulas clearly. It states them like – add line 6 to line 29 and then multiple by 0.3. You might really need to crack your head to understand the exact formula you are to use and one missed input in your calculator and the whole process goes wrong. So, be extra attentive when you are calculating on your own. Take help of an online tax calculator if necessary.
5. Missing the deadline without filing an extension
The IRS does not expect you to strictly meet the April 15 deadline every year. It has a provision where you can apply for an extension to prevent paying interest to the IRS. However, people still miss their deadlines without filing for the extension and end up losing unnecessary money. As a rule of thumb, file for the extension if you see that you are not ready to file your taxes by April 10. This way, you remain safe even if you can actually meet the April 15 deadline.
6. Filing taxes with the wrong status
The IRS lists a few statuses under which you can file your taxes. You can file as a single taxpayer or the head of the house. You may also file jointly or separately as a married couple. Depending on the status you pick, you become eligible for a few tax credits and many taxpayers tend to make mistakes when it comes to matching statuses and tax credit eligibilities. Another common mistake is where a taxpayer files as single even when he/she is listed as a dependent in another person’s tax report. The IRS rejects such an application due to the mismatch of information.
Filing your tax returns with mistakes only delays your refund process. The IRS has claimed recently that nearly 6 million tax return files are still pending processing from the tax year 2020 because of mistakes made by taxpayers. Accelerate your processing time by double-checking your tax return application and claim the refund in just 21 days, as promised by the IRS. After all, your big plans like buying a used car in Greenville with the refund money hinges on quick IRS processing. You cannot wait for another year to buy the vehicle you need.
And talking about fast processing, visit Family Auto buy here pay here in Greenville for easy bad credit financing approved within minutes. With your tax refund money, you can pay as much down as you want and purchase a quality used car with a hard-to-beat 2 years/36,000 miles warranty. At Family Auto, you do not have to wait for hours for loan processing or vehicle registration. Efficiency is written into our buy here pay here business model.
This is personal blog for Family Auto of Greenville. All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner is not be liable for any errors or omissions in this information nor for the availability of this information. The owner is not liable for any losses, injuries, or damages from the display or use of this information. Reader’s discretion is advised.