Ian Atkins, Analyst and staff writer at Fit Small Business
“Plan ahead. As with anything in life, if you want the best results possible, you need to plan ahead. Wealthy individuals and families do not wait until the last minute (or even until tax season) to start tax planning. They know that with professional guidance and time to enact a plan, they can save a ton of money. Everyone should be thinking this way. Your CPA or tax professional is not a magician, even if it sometimes feels that way. Do them, and yourself, a favor: talk to them about what you expect for the following year (changes to income, dependents, major purchases, work arrangements, etc.) and let them help you plan for the coming year. Effective planning will increase your tax refund more than any trick.”
Dave Du Val, Chief Customer Advocacy Officer at TaxAudit.com
As you’re filing, always be double checking for errors. As expert Dave Du Val from TaxAudit.com reminds us, these common tax filing errors are easy mistakes to make (and avoid).
- Wrong or missing social security numbers (SSN): Verify all SSNs using each person’s Social Security card.
- Wrong names: The names on the return must match each person’s Social Security card, including all dependents. Do not use nicknames or married names unless you have previously changed the name with the Social Security Administration office.
- Filing status errors: Check your filing status, especially Head of Household. Most tax software asks questions to help you determine your status. You can also go to the Interactive Tax Assistant.
- Math errors: There is a benefit to using tax software—the math is done for you. If you are doing the return by hand, double check all computations on a calculator with a paper tape. Keep your receipts with a tape showing the name of the deduction for reference in case you are contacted by the IRS for any reason, as any tax return can be audited even if it is 100% complete and accurate.
- Credit and deduction errors: Be very careful in calculating the Earned Income Credit, Child Income Credit, and the Child and Dependent Care Credit. Follow the directions, and review the rules for Qualifying Child, Qualifying Relative, and Qualifying Expenses. Another problem area is the Standard Deduction for those who do not itemize. If you are over 65 and/or blind, there is an additional standard deduction amount to add to your Standard Deduction.
- Forms not signed or dated: An unsigned return is not valid, especially for married couples where both must sign the forms. This can delay processing while the IRS sends a form for correct signatures.
- Electronic filing PIN numbers: E-filed returns must have a PIN number in lieu of a signature. If you e-filed last year, use the same PIN number. If you can’t remember it, you will need your 2015 adjusted gross income as originally filed—not as amended or corrected by the IRS.
- Remember, the Affordable Care Act is alive and well as of today. Make sure your 2016 return reflects all the requirements needed under the ACA (such as having minimum essential coverage) to show that you have the required health insurance and to avoid the shared responsibility penalty. Regardless of what Congress does tomorrow or next month, it will not change what’s required on your 2016 return.
Table of Contents:
- Taxes: the basics
- How do taxes work anyway?
- Step 1: Preparing to File
- Step 2: Select your method of filing
- Step 3: Filing & receiving your tax return
- Glossary of terms you may encounter
- Tax FAQs
- About the experts
- Works Cited