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Avoid These 14 Common Tax Filing Mistakes

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Tax season can be stressful for many individuals, and errors in the process can result in financial headaches and even legal troubles.

November 28, 2023
Author: NCH

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Whether you’re a seasoned taxpayer or filing for the first time, understanding these pitfalls can help ensure a smoother and more accurate annual tax filing process. Here are some of the notable ones you need to keep in mind:

Mistake #1: Missed Deductions and Credits

Taxpayers will often miss out on valuable opportunities to reduce their taxable income. Stay informed about available deductions and credits, such as education expenses, energy-efficient home improvements, and childcare costs, to prevent this. Utilize tax software or consult a tax professional to ensure you’re not leaving money on the table.

Mistake #2: Incorrect Personal Information

Simple errors in personal information can lead to significant delays in processing your tax return. Double-check your name, Social Security number, and other important details before submitting your forms. Make sure that the information matches your official documents to prevent any discrepancies that may trigger an audit.

Mistake #3: Not Keeping a Copy of the Tax Return

Once your tax return is filed, keeping a copy for your records is imperative. Having a copy on hand makes it easier to address any questions or discrepancies that may arise in the future. Consider keeping both physical and digital copies in a secure location.

Mistake #4: Failing to Report All Income

Some taxpayers forget to report all sources of income, especially income from freelance work, side gigs, or investments. The IRS receives copies of W-2s and 1099s, so failing to report these can trigger an audit. Keep accurate records of all income, including those that may not be reported to the IRS, and ensure they are included in your tax return.

Mistake #5: Forgetting to Sign and Date

It may seem like a minor oversight, but failing to sign and date your tax return is a common mistake. Unsigned returns are typically considered invalid, leading to potential penalties and delays. Before submitting your forms, ensure that all required signatures are in place.

Mistake #6:  Late Filing and Payment

Filing and paying taxes after the deadline can result in penalties and interest. Procrastination often leads to errors, as rushing to meet the deadline increases the likelihood of overlooking important details. Set reminders for key tax dates, and make a habit of filing your taxes well before the deadline to avoid unnecessary stress and penalties.

Mistake #7: Misunderstanding Self-Employment Taxes

If you’re self-employed, it pays to familiarize yourself with self-employment taxes. Many self-employed individuals miscalculate the amount owed, leading to underpayment. Familiarize yourself with the tax obligations or seek professional advice for good measure.

Mistake #8: Ignoring the Affordable Care Act Requirements

The Affordable Care Act (ACA) introduced new requirements for health care coverage. Ignoring these requirements or failing to report health insurance coverage can result in penalties. Be sure to understand and fulfill your obligations under the ACA to prevent unnecessary fines.

Mistake #9: Relying Solely on Tax Software

Although tax software is a valuable tool, it’s not error-proof. Automated programs may not catch every potential deduction or credit. Use tax software as a helpful resource, but complement it with a careful manual review or, ideally, rely on a tax professional for complex situations.

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Mistake #10: Neglecting Retirement Contributions

Contributions to retirement accounts, such as 401(k)s and IRAs, can have significant tax benefits. You might miss out on potential tax deductions and a chance to bolster your retirement savings. A financial advisor to determine the optimal contribution strategy for your situation.

Mistake #11: Assuming All Income Is Taxable

Not all income is taxable. Overlooking this can lead to overpaying taxes. Some sources of income, such as gifts and inheritances, may be nontaxable. Read and understand the taxability of different income streams to avoid unnecessary tax payments.

Mistake #12: Disregarding State Tax Obligations

Although federal taxes receive significant attention, state taxes are equally important. Be aware of your state’s tax requirements, deductions, and credits. Failing to address state tax obligations can lead to penalties and legal consequences.

Mistake #13: Claiming False Charitable Contributions

Charitable contributions may be deductible, but you need to provide accurate information. Exaggerating donations or claiming non-deductible expenses can trigger an audit. Keep detailed records of all contributions, including receipts and acknowledgments from the organization. 

Mistake #14: Not Seeking Professional Advice When Needed

If your tax situation is complex, seeking advice can be invaluable. A tax professional can guide deductions, credits, and strategies to optimize your tax outcome. While it may involve additional costs, the potential savings and peace of mind can be worthwhile.

The Bottomline

Preventing mishaps in tax filing requires attention to detail and staying informed about changes in tax laws. By being proactive and thorough in your approach to tax preparation, you can enhance the accuracy of your return, minimize the risk of audits, and potentially save money.

When in doubt, seek professional assistance from NCH to ensure your tax filing is error-free and complies with current regulations. Our expertise in Nevada’s tax laws makes us a valuable ally if you happen to make these tax-filing mistakes so that you can avoid them later on.

Call 1-800-508-1729 or visit our website to schedule a consultation!

DISCLAIMER: The above material has been prepared for informational purposes only, containing opinions of the provider, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consider consulting tax, legal, and accounting advisors before engaging in any transaction.

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