Post Date: 10-12-2023

Avoid Common Tax Mistakes: Tips for Filing Accurate Returns

As you know, all sources of income, whether they may be taxable or exempt from tax, must be reported by taxable individuals. This will be done by using the appropriate ITR form. You may be surprised to know, that an ITR filed on the incorrect form will result in the return being known as defective. These errors committed during the filing of an income tax return can result in penalties. Also, the legal action in addition to invalidating the return. In this blog, you will get to know common tax mistakes while filing returns.

5 Tips for Filing Accurate Returns

1. Not confirming the Accurate Name, Date of Birth, and Social Security Number

Despite its apparent nature, this is one of the general mistakes that are made when filing with the IRS. Also, take the extra time to verify that the dates of birth, social security numbers, and spelling of all names should be accurate for each individual.

2. Inaccurate Information About Direct Deposits

In this tip, you can deposit the refund amount straight into your bank account. As compared to receiving a paper check, this is usually a faster and even more secure way to get your refund. There is also a risk of losing your entire refund, though, if you use the incorrect account or routing number.

Furthermore, it might be returned to the IRS or wind up in another person's account. In either scenario, there is no IRS process for replacing funds that were lost through electronic transfers. So you might not be able to get your refund back. You need to spend a little more time verifying your account number and routing information twice.

3. Not Declaring All Earnings

Have you ever received additional income that should have been reported on a W-2 but wasn't? It is really imperative that you report any Form 1099-NEC that you may have received even if you did not receive one. In case you fail to report that income, you might allow the IRS to open an audit. This is by going back as many years as necessary under the statute of limitations.

4. Not Utilising Tax Deductions and Credits

You could be eligible for the ample of different kinds of tax credits and deductions. Credits and deductions can be significantly lower or even completely remove the person’s tax liability. It is not feasible to discuss these credits and deductions here. 

5. Full Donations to Charities

Ask this question, did you donate money or property to charitable causes? Donations of any kind, it may be from money to vehicles, will qualify for significant tax deductions. When filing, you should be sure that you count them all. Obtain all the tax information you will require at the time of the donation, such as the organization's name, address, and tax identification number. Moreover, note the date, the amount of the donation, and its value. 

Final Thoughts

In conclusion, to gauge your progress, you can evaluate your past tax returns against your current ones. Additionally, if you select to start working with a paid tax preparer or CPA firm, they can ensure that any losses or other carryovers preserve all the changeover. Hopefully, you understand all common tax mistakes in filing accurate returns.

Read more: Common Bookkeeping Mistakes that Can be the Downfall of Your Business