If you make any error on your income tax return, it cost you money. You don’t get an accurate refund that you claimed. Mistakes lead to paying more tax amounts with interest and any penalties applied. Any error in filing tax returns may invite an audit by Internal Revenue Service. Solve these errors before filing tax returns to avoid all tax penalties and save money.
Here are some points that help you to avoid mistakes or errors to save money:
- Correct Basic Information
Make sure that you provide the correct basic information regarding your name and your dependents. Spellings should be correct and give correct social security number. Enter the right filing status. You need to provide accurate financial information to the IRS. For example, if married couples file tax returns separately they may pay less tax under some conditions. You can file the federal income tax with IRS 1040EZ form.
- Report Exact Financial Information
You should provide accurate information carefully like salary, dividends, other income, and interest that was entered by the employer in W2 form, 1099 form, new 1040 form, K-1, etc. If the Revenue department sees any difference, you should request a correction to your employer.
- Enter information in correct box
Enter information in the correct line or box carefully. If you place any mistake while providing information regarding tax return, this may lead to loss of money and sometimes audit is done by the revenue department.
- Automatically take Standard Deductions
Itemizing needs more hard work and efforts with receipts and other related documents rather than remain on standard deductions. You need to check if the standard deduction is good or itemization your deductions are better alternatives. You can approximately double the return with standard deduction under the TCJS act rather than itemization.
- Take every write-off that you are entitled
Some taxpayers fear about audit due to some deductions and they don’t place these deductions anywhere. For example, one can think that claiming the return for home office deduction leads to tax Audit. This is a false belief. If you fulfill all the requirements of tax law for deductions, you are eligible to take a claim for such deductions. If you are self-employed and work from home office, you can claim home office deductions.
If you make any mistake in the given information, it is easy to reverse or leave a number or digit. For example, you add $5300 to your Individual Retirement Account (IRA) but $3500 is entered by mistake on your tax return, the difference $1800 cost you more amount in tax if you fall in the 24% tax slab. If you want to indicate a negative number, always use brackets because IRS computer software only identifies the brackets.
If there is a need to enter an item as a negative number, use brackets instead of minus symbol. IRs computer read the negative entry placed in brackets.
- Inform IRS to handle your returns
You must tell the IRS to manage your fund if you overpaid the taxes. A cheque is sent by U.S. Treasury; you can add bank account number and routing number to get your tax return faster. The given bank information help you to deposit your refund directly to the bank account.
You must keep a signed copy of the return with all filing proof to avoid any claim by the IRS about late filing the tax return or not at all. Keeping all information on tax return helps you for the next financial year.