It is tax time. Every year people make stupid and avoidable mistakes. Most of these mistakes result in wasted time and money. Be proactive this year and avoid the most common mistakes. Here is a list of the top three mistakes people make when filing their taxes.
Top Stupid Mistakes While Fixing Taxes
Stupid Tax Mistake Number One:
Not filing. File a tax return! Every year thousands of people do not complete and file their tax return. This occurs for various reasons. Many people do not complete their tax return because they owe money or think they owe money. By not filing the situation with the IRS problems only compounds. When you do not file a tax return because you owe money the IRS will assess a penalty on the amount owed. There are payment options that can be made with the IRS as long as you send in a return. Send in even a small payment with your return. You will only increase the amount of money you owe the IRS if you don't file, so avoid this very common mistake and file your tax return.
Stupid Tax Mistake Number Two:
Typos and wrong information. Yes, people do everything from using the wrong social security number to spelling their own names wrong. Make sure to avoid this mistake by filling out your information correctly. Double check your math and all of your IRS forms. Transposing numbers and making typos can lead to mistakes that cost you money. Write down the right social security number. When in doubt check it out on your social security card. The IRS uses your social security number to process claims, so if it's wrong, you lose money. Check the right box. Make sure to fill in only one box for your exemption status. Filling in the wrong information can cause you to lose deductions, earned income credits, and dependent exemptions.
Stupid Tax Mistake Number Three:
Forgetting to sign the check to the IRS. Of course, you don't want to pay, but sending an unsigned check isn't going to give you a pass. Every year people forget to sign their check to the IRS making it invalid. Sending an unsigned check is as good as not sending it at all. Use the correct banking information. Every year people delay their refunds because they use the wrong account number or write down the wrong bank routing number. The routing number is unique to your bank so if you write down the wrong number the IRS will not be able to send you the refund.
Bonus Stupid Mistake to Avoid While Filing Taxes:
Do not pay your IRS taxes with a credit card that has a higher interest rate than the IRS interest rate. Paying taxes with a high interest credit card will only get you more debt. If you need to borrow money to pay your taxes, research to find the lowest rate loan from your bank, credit union, or family member. Although you do want to pay your taxes it will not help your financial situation to incur more debt. Try to avoid accruing too much interest.
No one likes doing their taxes; however, if you follow these tips you will avoid the most common mistakes people make filing their taxes. Avoid these mistakes and pass them on.