Friday, January 29, 2016

Money matters - Avoid these top ten most common tax mistakes

Every year, due to common mistakes, billions of dollars in refunds are left uncollected by taxpayers from the Internal Revenue Service (IRS). Liberty Tax examines the Top 10 tax mistakes made each year by taxpayers in hopes to prevent them from repeating errors that may cost them money.
            • Staying Up-to-date on The Tax Code: The biggest tax news of late is the Affordable Care Act and how Americans will be responsible for the Shared Responsibility Payment if they do not have health insurance and are not exempt from obtaining coverage. Taxpayers need to research the latest changes to the tax code before filing their own taxes.  

            • Not Claiming All Earned Income: If examiners find money a taxpayer earned and did not report, the taxpayer could owe interest and penalties, in addition to the tax that would be owed on the income.

            • Number Errors: Another common mistake that could cost taxpayers is entering numbers on a tax form. A costly error, for example, could be entering in the wrong bank account number when requesting a refund to be direct deposited. The refund could actually be deposited into someone else’s bank account. 

            • Math Errors: Careless math mistakes cost taxpayers each year.

            • Filing Under the Correct Status: With five different options available under filing status, the most accurate one for a taxpayer’s situation may not be easily determined. Each filing status could have an impact on the tax liability outcome.

            • Mismatched Names: If a taxpayer’s name does not match the name and Social Security number the IRS has on file, the tax return could get kicked back or the process could slow down.

            • Paying Multiple State Taxes: Many taxpayers forget that income earned in another state must be reported. If taxpayers fail to file this return, they could face fines, fees, and penalties, in addition to the taxes owed.

            • Forgetting to Sign the Forms: It is an all-too-common mistake to forget to sign on the bottom line. For those who owe and wait until the deadline to file, forgetting to sign their tax return could cost them a late fee and penalty when the IRS kicks it back for signature and April 18th has passed.

            • Falling for Tax Schemes: If a taxpayer believes he or she may be at risk for identity theft, the taxpayer should contact the IRS Identity Protection Specialized Unit, toll-free at 1-800-908-4490.            • Missing a Deduction or Tax Credit: While penalties and fees mentioned above could cost a taxpayer plenty, missing a deduction or tax break could cause the taxpayer to owe more than he or she should or get a lower refund than what they earned.

            This article was brought to you by Liberty Tax Service. “Tax preparers at Liberty Tax Service constantly undergo training to stay updated on the current tax laws and changes. It’s not just our customer service that keeps people walking through our doors every year, it’s the peace of mind they get with our tax preparers,” said Adams, owner of Liberty Tax Service in Windham.

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