The Six Most Common, and Avoidable Personal Tax Mistakes You Need to Watch Out For

tax errors
  • Avoid these most common personal tax mistakes.

    Filing your returns every year is often the best way to ensure you get the most back, but there are many tax errors that you can make during this process that will cost you money. These are the most common personal tax mistakes that people like you make every year. Thankfully, they are easily avoidable if you follow the simple advice we discuss with each error.

    #1: Rounding Up When Making Deductions

    Have you ever rounded up or down when figuring out your deductions or created an amount that is a little too even? This mistake is dangerous because it can throw off the accuracy of your calculations. Even worse, it can lead the IRS to investigate your claim. The best way to avoid this problem is to be as accurate as possible. Add the exact dollars and cents – never round the numbers.

    #2: Simple Inputting Errors

    Do you double-check your tax forms before you send them to the IRS? You should! It’s easy to miss spelling errors, math mistakes, debits and credit errors, swapped bank account numbers, and even a missing signature. Each of these mistakes will severely impact your tax return. Double and triple-check your reports to ensure they are error-free.

    #3: Ignoring Charitable Contributions

    Did you include your charitable donations on your tax return last year? If not, you should do so this year. Many people don’t realize they can write-off many contributions. You may even be able to write-off the time you spend performing charitable acts! Talk to your tax attorney to learn more about these possibilities.

    #4: Failing to Input Income from Side Jobs

    Do you make a little extra money with a side hustle this year? If so, you need to report this income, assuming it meets the proper threshold. Typically, this is about $600 or so. Failing to add this income information to your return could throw up red flags on your tax return. Reporting this income is crucial because you may be able to write off many business expenses if you do.

    #5: Trying To Claim a Non-Profit Status

    Many people think that reporting their income as non-profit can save them from excessive taxes. That is just not the case. In fact, it is possible that you may end up spending more money than you would have otherwise. Complicated rules dictate non-profit tax reporting, and if you run a small business, you shouldn’t try to report this status unless you fully understand those rules.

    #6: Using the Wrong Tax Forms

    Last, but not least, is reporting using the wrong tax forms. Most people are going to report using a 1040 form. You can also use 1040A and 1040EZ to streamline the process. However, there are specific circumstances that allow you to use these types and others. Using them without meeting these requirements will confuse the IRS and lead to a possible audit.

    Never Make Another of These Personal Tax Mistakes

    By following these guidelines, you can avoid ever making another tax mistake. If you need help implementing any of these methods for your business, please don’t hesitate to contact us today. We can help streamline your returns and help you avoid severe and avoidable mistakes with your taxes.

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