Tax preparation is a lot of responsibility – and as the tax season comes, you might be tempted to rush it which could result to errors and you might be charged with serious penalties. This is surely an utter nightmare for every one out there, so here are 5 mistakes to avoid in tax preparation.
5 Errors to avoid in Tax Preparation
1. Wrong input of names
This might sound unlikely, but yes it’s one of the common mistakes among taxpayers out there. Sometimes, you might not done this on purpose- some taxpayers misspell the names of their dependents and spouse. The rule is that the names on the tax return should match the names as they appear on your SSA (Social Security Card). If there would be a name change, you should contact first SSA to avoid conflicts in the future.
2. Incorrect Bank Account Numbers
Make sure you enter your bank routing and account numbers correctly, because it could cause a huge hassle for you when you entered the wrong account or bank routing number. If you e-file and you use direct deposit, you can get your refund back in a few weeks, but only if you entered the correct information.
3. Unsigned forms
An unsigned tax return is an invalid return, and this mistake is actually common as cited by the IRS. A return is only considered timely filed if it is properly signed and submitted on time. Also remember that if there is a joint return, both spouses must sign the return in order for it to be valid.
4. Math error
This is also one of the common mistakes committed by tax payers and it usually involves just simple math errors. A small miscalculation can already cause a serious impact and you might get into trouble with the IRS. To avoid this mistake, there are available tax preparation software programs to use (not all of them are free) or hire a professional accountant who would crunch the numbers for you. It is very important to double-check your calculations before filing.
5. Not updated to the recent tax laws
Always remember to look out for major changes to the tax code every year before filing. Here are some changes effective for this year 2018:
- Those who are married and filing jointly will have an increased standard deduction of $24,000, up from the $13,000 it would have been under previous law.
- Single taxpayers and those who are married and file separately now have a $12,000 standard deduction, up from the $6,500 it would have been for this year prior to the reform.
- For heads of households, the deduction will be $18,000, up from $9,550.
- The personal exemption has been eliminated with the tax reform bill.
You can search online or contact IRS for the complete changes in the tax code this year.
There are still a lot of mistakes that are committed by taxpayers and you can avoid it by simply preparing your taxes on time, following the instructions and keeping everything organized. Mistakes are bound to happen, so it is important to check your work time to time and slow things down- it is better to commit a small error while starting compared to a huge error once you had finished your tax preparation.