Tax season is here, once again! I anticipate that this season will be different than tax years of the recent past due to the Tax Cuts and Jobs Act (“TCJA”). While a lot has changed, there are a few things about tax season that never change – mistakes.
Every year taxpayers repeat the same mistakes. Most of them are simple, small, easy-to-avoid errors that cause MAJOR headaches. So with that in mind, I’ve put together a list of common mistakes you can avoid:
Incorrect Social Security Numbers
Your social security number is how the IRS confirms your tax filing. It is very important to get this right. Often times taxpayers transpose or input one wrong digit which can cause the IRS to issue a “Non-filing,” notice with interest and penalties.
Incorrect Bank Account Numbers
Direct deposit and direct withdraw are convenient features to receive your refund or pay your tax liability quickly and safely. But inputting an incorrect account or routing number can lead to delays or, in the worst case scenario, lost funds. Be very diligent when providing your banking information.
Accounting firms cannot release your electronically filed returns without a signed Form 8879 (Electronic Filing Release Form). Form 8879 should be signed and returned immediately to ensure a timely filing.
The IRS and state/local taxing authorities cannot accept paper filed returns that are not signed. Be sure to hand sign any returns that are required to be paper filed.
Many taxpayers attempt to prepare their returns by themselves. This can lead to numbers being transposed or calculations being incorrect. It is best to allow tax professionals and highly sophisticated software to perform the calculations. There are many new tax laws in place for this tax year due to the TCJA, so it is even more important to have a professional prepare your returns.
Forgetting Changes from Prior Year
Did you get a new job, have a baby or a child move out, purchase a new residence, or make a new investment? Taxpayers often forget new activities or changes that occurred during the year and can exclude this valuable information from their returns which causes errors, miscalculations or notice of discrepancies. Carefully review your previous year and inform your tax professional of any additional information they may need to correctly prepare your return.
Missing Deductions or Credits
The TCJA added, adjusted and removed many deductions and credits for 2018 (and beyond.) Taxpayers often don’t know what deductions or credits are available and thus don’t take advantage of possible savings. It’s best to have a professional review your information in order to maximize your tax savings and credits.
Keeping these mistakes in mind when preparing your taxes this year can go a long way towards keeping you out of trouble with the IRS. If you have any questions on these or any other tax matter, please contact your Zinner tax expert.