Tax Tip of the Week: Avoid Common Errors

taxes_judgementalistflickr

The countdown is on! If you haven’t yet file your 2008 tax return (or an extension), now’s the time to get busy. If you make a mistake in your rush to beat April 15th, the processing of your return could be delayed, which means you won’t recieve that refund as soon as you could have.

Lucky for you, those early filers have been making mistakes for weeks and you can learn from them. According to the IRS, these are the most common erros on 2008 tax returns:

  • Recovery Rebate Credit – If you did not receive a stimulus payment in 2008 or did not receive the maximum amount, you may qualiy for a Recovery Rebate Credit. To calculate the correct amount of the credit, you must know the correct amount of the stimulus payment you received.
  • Social Security Numbers – These nine digits are easy to transpose, but you must get them right. Enter SSNs exactly as they appear for each person listed on your tax return.
  • Dependent’s Last Name – If you can believe it, a lot of people are misspelling their dependent’s last names.
  • Filing Status – If you don’t choose the correct filing status for your situation, the IRS may delay processing of your return.
  • Math  – When you file electronically, you don’t have to worry about math errors. However, a lot of people still file hard copies, and they make mistakes.
  • Computation – Taxes are complicated. Mistakes are easy to make. If you’re doing your own taxes, take your time. The IRS is seeing a lot of mistakes this year in taxable income, payments, and various credits such as the Earned Income Credit, and the child and dependent care credit.
  • Bank Account Numbers – Ouch, this could really hurt. Make sure you have the right financial institution routing and account numbers for your direct deposit refund.
  • Signature and Date – Unsigned tax returns are not valid. Seems a little silly with all the electronic filing, but still. The IRS is serious about signatures – electronic or handwritten.
  • Adjusted Gross Income – This is a little tricky. It comes into play when you file electronically for the first time. In order to allow you to ‘sign’ the return using a personal identification number, the IRS system verifies your identity by requesting you to enter the AGI from you originally filed 2007 federal income tax return.  (If you filed electronically last year, you can use the PIN you used then.) Only the original AGI, and not one from an amended return or even one that is the result of a math error corrected by the IRS can be used for this purpose.
SEE ALSO:
Wave Review: The Best Small Business Free Accounting Software

Use this list to double check the return, or better yet, have someone else do it for you.

Image Credit: judgementalist, Flickr

  • Get an accountant to do it, then at least you will have someone else to blame. After all they paid to get it right.