Second, the IRS cross-references data with the Social Security Administration and can catch name and number mistakes as they track the data. In your return, it may take longer to catch, but you will get notified by the IRS and will need to re-file. With electronic filing, you will merely need to correct the error and re-file. First, in the age of digital filing, a mis-entered Social Security number is flagged very quickly. If you enter your Social Security number (SSN) or name incorrectly on your tax return, there are a couple of reasons why this mistake isn’t as bad as it used to be. Missing or incorrect information (SSN, name) Some deductions are available for specific occupations, so make sure to communicate to your tax consultant every path for opportunities to save. These are merely a few of the kinds of breaks and write-offs available. For instance: Office supplies for the self-employed, tuition-related expenses, certain job search expenses, and energy efficiency upgrades. A write-off is different than a tax break in that it’s typically a business or education-related expense that’s deducted from your income when you itemize your taxes. Tax breaks are a variety of deductions and exclusions that the government sanctions, from dependent exemptions to Social Security income. Tax breaks and write-offs account for a large failed opportunity to save on your tax bill. Additionally, the Government Accountability Office has found that over 2 million people overpay their taxes because they did not itemize their return. If your itemized deductions are larger than the standard deduction, it will reduce your tax burden – sometimes significantly. You have job expenses that qualify as write-offs.If you own a home and have been paying mortgage interest.You’ve suffered large losses from theft or natural disaster.If you’ve contributed large amounts to charitable organizations.When you have paid large uninsured medical or dental bills out-of-pocket.When should you itemize? The general rules are: The alternative to the standard deduction is itemizing your taxes, which steps through your allowed deductions item by item. While this makes for a simpler preparation of your tax forms, it may leave thousands of dollars on the table. The standard deduction is an amount set by the IRS that each person can claim on their tax return that ensures a portion of their income isn’t subject to federal income tax. Claiming standard deduction/not itemizing You have the ability to explain the reasons for the change and submit the documentation along with the difference in payment. If you find that you’ve miscalculated, the best course of action is to re- file using the 1040X Amended U.S. The most common mistake is one of arithmetic, despite the abundance of electronic tax programs. If your tax returns will not be ready by April 15th, you can file for an automatic extension but you still need to pay your estimated taxes by the 15th. Hypothetically, if you owed $5,000 and paid one month late, you would need to pay an additional $306.59 in fees and interest. The Internal Revenue Service (IRS) not only charges a failure to file fee as a percentage of the money you owe, they also levy a failure to pay fee along with interest. Everyone knows the day, so there is no excuse for missing the deadline, but people who owe money may not be able to pay and will not file on time, hoping somehow it will buy them some time. Tax day is April 15th every year (although technically there are some years it falls later due to the 15th falling on a weekend or holiday). The most visible mistake is filing your taxes late. At Robinson & Henry, our tax attorneys have seen a lot of these slips, so we put together a list of ten common errors to help you try and avoid them. Consider also that some tax debt owed to the IRS cannot be written off in a bankruptcy, and even for those tax debts that can, it can be very complicated. Any oversight can be very costly, not only from a cash standpoint but also the time you’ll spend gathering supporting documents as well as getting papers signed and sent. Some mistakes are big, some are small, but they’re all preventable. The taxman comes every year and despite our collective familiarity with the process, there’s still a lot of room for error.
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