Want to get a quicker tax refund?
We’re here to help you avoid costly mistakes!
Every year like clockwork April 15 rolls around and with that spot on the calendar comes the deadline for filing income taxes. If we listen really hard we could almost hear Uncle Sam yelling “Ready or not, here I come“! To help you get that refund faster, we’ve put together a list of the 5 top income tax mistakes that result in delayed or possibly denied refunds, penalties & fines, as well as some tips for fixing the mistakes or better yet ~ avoiding them altogether! After all, steering clear of tax mistakes is the name of the game when it comes to personal filing.
So what if things don’t go as planned? Opening the mailbox to find a letter from the IRS instead of a check can wreak havoc on your emotions and in some cases may lead to financial hardship. Failure of the planned refund arriving on time is often due to some common errors and usually not the end of the world, or even the end of your refund.
#1 Top Mistake: Missing or Incorrect Identification Information
The Internal Revenue Service estimates people who do a paper return are 20 times more likely to leave out critical information, all of which can cause a delay in receiving the refund. Information most often missed includes:
- Social security numbers either incorrectly entered or missing altogether
- Incorrect spelling of names
- Using the wrong filing status
- Incomplete income information
- Can you guess the biggie? Incorrect bank information!
It pays (literally) to check and double check those bank account and routing numbers when requesting direct deposit. Before clicking the “file now” button, employ the “buddy system” by reading the numbers aloud while the buddy verifies their accuracy – TWICE! Better safe than sorry certainly applies in this situation. It’s true God wants us to be cheerful givers, BUT can you imagine going through the entire tax filing process to have your refund withheld or worse ~ deposited to a stranger’s account because of incorrect information?
#2 Top Mistake: Incomplete Income Information
Mores specifically, missing W2’s and 1099’s and then not reporting that income on your tax return. These forms are your official income statements for the year. If you earned money, in most cases a W2 or 1099 is required to be filed with the IRS by the employer, and reported by the earner – you! If you changed jobs during the year or work more than one job, you will end up with multiples ~ include them all in your return. In the case of missing W2 or 1099’s, the IRS can help. If you have not received your form(s) by February 23, here are some things you can do:
- Call the IRS at 800-829-1040: They’ll even send a letter to your employer on your behalf requesting the W2 or 1099. Look here to prepare the necessary information before you call ~ not having the info will cause another delay.
- File on time even without the W2’s and 1099’s: Yep, you read it right! The IRS recommends to estimate your wages and earnings as much as possible and go ahead and file on time. I don’t know about you, but that’s a little bit scary to me and certainly spells out F-O-L-L-O-W -UP- R-E-Q-U-I-R-E-D! When it comes to our money playing the guessing game is just simply uncomfortable. A safe alternative is to get an IRS transcript. This is the document where all your tax information is kept each year, INCLUDING the amounts employers paid to you. If you have to file without your official forms W2 and 1099, using this data is a safe alternative. Don’t forget there is the option of getting an extension if you just can’t file on time (but remember, you STILL have to file for the extension on time). You can see more on that topic here.
- Amend if Necessary: Thanks, but I would rather not ~ amend that is! We are here to talk about steering clear of mistakes and avoid the need for time-consuming, painstaking amendments! However, when you have done all you can and you just gotta go there, it’s still okay. Read on to see how to work through the process and get your refund on its way faster.
If you discover that your return contained an error you may not need to amend it. In some cases, the IRS will correct minor things such as simple math mistakes and notify you of the changes. However, DO file an amended return if there is a change in your filing status, income, deductions, or credits. Now, the IRS will certainly work to with you to straighten out filing mistakes. A form called the 1040X is available at www.IRS.gov or by calling 800-TAX-FORM (800-829-3676). It’s designed specifically for tax filing mistakes. You can even check the status of your amended return here. The great news is you will indeed get your refund! The down side is that more time will lapse while straightening out mistakes. Better to avoid all that frustration and steer clear of these common mistakes the first time around.
E-filing software is the most popular way to file unless you have a complicated return. There are many programs available and they can help with some of those mistakes by alerting us when a field is filled in or left blank, but it’s really up to you to enter the data correctly.
#3 Top Mistake: Math, Credit & Deduction Errors
- Avoid Math Mistakes: Every year tons of returns are filed containing miscalculations in math. It’s so easy to transpose numbers. Who hasn’t done this? Electronic tax software contains built-in calculators that help eliminate these issues. However, we still have to enter the the initial data correctly. Whatever we enter is what the software has to work with, so be careful and don’t forget the buddy system. We recommend having a coupon buddy to help avoid common coupon mistakes; the same principle applies here.
- Claim Verifiable Deductions: Some of the top mistakes made in claiming tax deductions are found in the credits for earned income, child care credits and erroneously claiming deductions that you are not entirely qualified for. With today’s trend of so many of us telecommuting and working from home, another popular deduction that is sometimes misreported is the deduction for home office or the deduction for charitable donations and the issue of the tithing. Our friends over at Dave Ramsey recommend taking the deduction as doing so does not diminish the sanctity of the tithe, and is in fact being the good manager God desires.
Whew! Donations, expenses, credits, deductions, extensions! This may be starting to sound like an advertisement for the IRS, but in reality it’s the best resource for answers and they have a ton of those. We found a tool to help you do your homework and see what’s deductible and what’s not. Wa-HOO! Take a look at some IRS resources about home office and other deductions for individual filers – (that’s us)!
Keep Receipts: Once you know what you can deduct, it is important to be able to verify the expense. How do you do that? You guessed it again ~ receipts! Keep them all! They are your single best protection in the event of an audit. Arguing with the IRS won’t help a thing ~ receipts are evidence of your claim. Want some tips for organizing your receipts? While the ole’ shoebox or shopping bag trick may be dandy for some, experts recommend taking it just a wee bit farther than that. The folks over at TurboTax say a good place to begin is by writing on each receipt immediately when you incur a valid expense and placing it in an appropriately labeled envelope. Another option is to write on the receipt and take a photo of it. Developing this habit takes only moments out of the day and will soon stop feeling like a chore. Then, follow it up with regular dedication to transferring the data into either a spreadsheet or financial software, perhaps monthly at bill paying time. If you are the geeky type, there are also some online options that offer free digital storage such as ShoeBoxed. Whatever your preference, once you get started you’ll be in the habit before you know it and tax prep will be a breeze. It’s still early enough to set this practice in place for next year!
One more word about keeping receipts ~ it is still the best way to assess your annual spending accurately and therefore the best tool you have to help you develop a healthy monthly budget and stick to it. In the TrueCouponing way, we are all about being the best managers possible of all the resources God has blessed us with, and we have a tool to help you do just that. Get our handy free Coupon Savings Tracker here! (We just LOVE our spreadsheets around here and this is one we think you will love too!)
#4 Top Mistake: Forms Not Signed
It’s not legal till signed: Ever paid a bill with a check only to have the lender call you up or return an unsigned check AND a late notice? Frowny face! Happily, online bill pay erases that one potential for error for many of us. However, when on the subject of filing a tax return they must all be signed ~ yes, even the electronic returns have to be signed. This is one signature you do not want to miss as it will certainly lead to a delayed return and even a penalty! Many tax software companies take the hassle out as they won’t let you proceed to the e-file step without it, but you may want to read these up-to-date instructions from good ole’ Uncle Sam to help you avoid this common tax filing mistake if it’s an issue you encounter.
#5 Top Mistake: Paying When it Could Have Been Free
Why pay when it’s free? Many top e-filing services such as TurboxTax, H&R Block, TaxAct, and more offer free filing to qualified individuals. One last IRS commercial here will help you see if you are qualified and ultimately help you get that refund on it’s way quicker!
One little word here about taking advantage of free filing services and tax advantages, if we may. Many of you, like us, may live in or near a town with a military base. At TrueCouponing we love our nation’s men and women in uniform and appreciate their sacrificial service ~ God Bless Them All! If you are one ~ first THANK YOU, and second ~ check out these Tax Breaks for Military Families from the nation’s leading banking resource for military members – USAA (also one of our favorite mobile apps)! You may also be interested to learn about VITA and other programs who provide free tax preparation for service members here or even how to donate your expired coupons to the military.
Bonus Mistake: Pay Yourself Instead of Uncle Sam
One year we were going to have to pay on our taxes. A tax accountant told us if we donated to OUR OWN IRA (which has a deadline of April 15th of the year AFTER you are filing, so if you are filing your 2014 taxes, you would have until 4/15/15 to contribute at a bank), it would reduce our income enough to not pay anything. Ultimately, instead of giving more tax money to the government, we were able to contribute to our own retirement (which is delaying the tax we will have to pay on that money later). As a young, newly established family, just starting out, we needed that delay! So learn from my experience and at least look into it. You might find a similar solution to pay yourself and save money too!
There you have it straight from the horse’s mouth, how to beat the Top 5 tax filing mistakes and get your refund faster!
What are some simple tax filing mistakes you have made that caused a delay in your return?
We would love to hear from you ~ we can all bless each other by sharing experiences!
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