Your Tax Filing Guide: Common Mistakes to Watch For

Before the upcoming tax season, it’s crucial to review important tax basics and consider seven key aspects when e-filing your federal income tax return. Common pitfalls taxpayers face can lead to missed refund amounts. Proactive measures can help avoid these mistakes, ensuring a smoother filing experience and potentially saving money. 

Late or not Filing

To avoid penalties for late filing, it is crucial to file an income tax return on time. If you are missing crucial tax information, you can file for an extension or amend the return later. Even if you cannot pay immediately, file your return as the tax authorities impose penalties for filing late and paying late. If you are not required to file, it is advisable to prepare a return as you may be entitled to government money through refundable tax credits and other tax benefits, which can only be claimed if you file.

Ignoring Form 1099 Income

Form 1099-NEC and Form 1099-S are required for freelance work and real estate transactions. It’s crucial to report all income earned throughout the year on your return, regardless of source. The IRS receives copies of these forms and may not immediately notice if you don’t report all income. If you don’t, you’ll receive a notice with a balance due from the IRS.

Inflating charitable donations

Noncash contributions to a charity can be beneficial as they help the charity and allow deductions for the item’s value. However, taking a larger deduction than necessary can lead to IRS disallowance, additional tax, interest, and penalties. It’s crucial to report contributions accurately to avoid significant penalties. Always report contributions as accurately as possible.

Name-Social Security number mismatch

Before filing your tax return, ensure that all names and Social Security numbers for you, your spouse, and dependents are spelled correctly on official documents. Even a minor typo can cause significant delays and headaches, so it’s crucial to triple-check names and numbers for accuracy before submitting your return.

Neglecting Optimal Filing Status 

Filing statuses can save money, such as joint filing for married couples or head of household filing for single individuals with at least one dependent, assuming qualifications are met. Joint filing can result in lower total tax payments, while head-of-household filing is more effective.

Not Leveraging Current Year Return for Next Year Planning

As you file for 2023, consider any changes you can make to save money for next year’s tax season. If you missed out on any tax credits or deductions, qualify for them in 2024. Use our Refund Booster1 to adjust withholdings and plan your best 2024 personal tax year using your 2023 return.