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The IRS collected a staggering $3.5 trillion in 2019 alone.
Of course, when we say they “collected” it, we’re not being entirely truthful. They don’t go around door-to-door to pick it up. Instead, you have to file it in your tax returns.
This can pose problems for some people. Tax filing errors are common, and potentially very costly.
Read on to learn about the six most common tax filing mistakes people make, and how you can avoid them.
1. Mistakes in Calculation
Simple calculation mistakes are among the most common issues with tax returns nowadays. There is a lot of arithmetic involved in filing a tax return, and it only takes one slip to undo a lot of good work.
Make sure you have a calculator on hand or a spreadsheet open when you’re doing your addition and subtraction, and always double-check everything.
Also, when you’re sending your returns in for inspection, make sure to use a reliable mail provider. Certified mail is the best way to mail tax return documents.
2. Issues With Social Security Numbers
It’s a number you’ve probably known by heart for years. However, that doesn’t stop people from getting it wrong when they’re submitting tax documentation.
Your Social Security number is the most important identifying characteristic on your tax return form. If you get it wrong, the authorities won’t be able to process your filing accurately.
3. Bank Account Numbers
If you’re due a refund, the easiest way to get it is via direct bank transfer. Of course, if you don’t give the IRS your proper bank account number, they’ll have no way to give you back your money.
Therefore, it’s crucial to double-check this before making your submission.
4. Signing Forms
You might not think this would be such a big deal, considering it doesn’t affect any of the maths or technical details involved. However, if you fail to sign your returns in the right places, it won’t be valid.
5. Entering Information Incorrectly
Data entry is another thing that catches a lot of taxpayers. Make sure your name, address, and the names and details of your family members are communicated properly.
6. Itemizing vs Standard Deductions
Deductions are one of the most challenging parts of the tax returns process for many people. Should you take the “one-size-fits-all” standard deduction, or itemize your deductions individually?
Since the Tax Cuts and Jobs Act, it now makes more sense for the majority of people to take the standard deduction. However, not everyone will benefit from it. To see how you’ll really save more money, you’ll have to examine your circumstances and see what itemized deductions you’ll qualify for.
Avoiding Tax Filing Errors in 2020
Tax filing errors are easy to make, and potentially very difficult to fix. You could be left with delayed payments, resulting fines, and even criminal liability in extreme cases.
With all this in mind, you need to be very careful when filling out your tax returns. The information above will be a good place to start if you’re filing in the near future.
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