The Five Mistakes You’re Most Likely to Make on Taxes

Bad Math

According to Bankrate, the most common mistake every year is inaccurate math. Using tax software programs helps reduce errors with built-in calculators, but you can still transpose two numbers and end up with the wrong results. Just like in school, be sure to double check your work before you turn it in.

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Missed Deductions

Every donation you made to an organization with a tax-exempt number is eligible for a deduction. Keep copies of the letters or receipts you receive for donating to a friend’s charity run or giving clothes in good condition to Goodwill. Adding up a year’s worth of donations can give your return a nice boost.

Other commonly missed deductions include expenses related to job hunting, health insurance premiums and utilizing the child care credit.

Filing Status Errors

Choosing incorrectly between the five filing status options can be a big mistake. If you’re a first-time filer or you’ve had a major life change since your last filing be sure you understand what each status entails before picking the best one for your situation.

Not Reporting Additional Income

Whether you took on some side work or did well on an investment, any additional income you received in the last year must be reported on your taxes. Contract workers receive a Form 1099-MISC to report their earnings and your financial institution should send statements reporting your annual income from interest or investments. Include these in your tax return to avoid penalties or interest from the IRS on unreported earnings.

Procrastination

Don’t wait until the April 15 deadline to complete your return. Start early so you have some buffer time to track down documents or contact old employers. If you absolutely can’t make the deadline you can file a Form 4868 to get a six-month extension. Be warned that if you owe money and do not send it before April 15 you will be fined, whether or not you file an extension.

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Resources:

http://www.bankrate.com/finance/taxes/10-common-tax-filing-mistakes-to-avoid-3.aspx

http://money.msn.com/taxes/10-big-deductions-too-many-of-us-miss-5

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