Don’t Make These 10 Tax Return Mistakes If You Want a Faster Refund, Lower Taxes, and to Avoid an Audit

Don’t Make These 10 Tax Return Mistakes If You Want a Faster Refund, Lower Taxes, and to Avoid an Audit

1. Missing the Tax Deadline or Not Filing a Return

The deadline for filing taxes is April 18, 2024. If you do not file or miss the deadline and you owe taxes, the IRS will charge late fees and penalties.

Even if you owe taxes and cannot afford them, you should still file on time and consider applying for an IRS payment plan. Otherwise, late fees and penalties will be added.

Many taxpayers do not file a return and are owed a refund. The IRS cannot issue a refund unless they receive a 1040 indicating you are eligible for a refund. In some cases, average refund amounts could be as high as $3,000 – $4,000.

2. Forgetting to Sign and Date a Return

The IRS requires your signature and the date you completed your 1040 to validate and process your return. If either your signature or the date is missing, the IRS will return the 1040 either online or via mail.

Always double-check a tax return for signatures and dates to make sure it is complete. This is especially important if you are expecting a refund and need it ASAP. The IRS will not process any tax documents if they are not signed and dated.

3. Using Incorrect Personal Information

Mistakes such as misspelling your name, giving an incorrect mailing address, or providing the wrong Social Security Number (SSN) will delay the processing of your tax return.

Although the IRS will correct basic math errors, they will not correct personal information that is wrong.

To correct these mistakes, the IRS may ask you to file an amended return (1040X). This will extend the time for the IRS to review your return and issue a refund, or if you owe, for you to be able to make the correct tax payment.

4. Choosing the Wrong Filing Status

The IRS lists five filing statuses from which taxpayers can select:

  • Single
  • Married filing jointly
  • Married filing separately
  • Head of household
  • Qualifying widow(er) with dependent child

Each filing status has specific criteria describing eligibility for applying that status to your federal tax return. Using the wrong filing status could result in the delay of a refund, underpaying taxes owed, or missing out on using tax deductions and credits that could lower your taxes.

In addition, taxpayers who file the wrong status and receive tax benefits or refunds may eventually find the IRS conducting an audit on that return to determine if the incorrect status was unintentional or deliberate.

5. Missing Tax Documents

The IRS will not accept tax returns unless they are accompanied by income documents that show yearly earnings, taxes withheld, and other tax-related information relevant to processing the return.

Examples of tax documents that must be included are W2s, 1099s, 1098s, and SSA-1099 or RRB-1099s.

Until the IRS receives the documents they request, they cannot finish processing a tax return. Refunds will be delayed. For those who owe taxes, late penalties and interest will be added.

6. Failing to Report All Income

Neglecting to include all income sources on a tax return may result in underpaying taxes owed and triggering an IRS audit.

The IRS receives copies of W2s, 1099s, and other income forms from banks, employers, and other entities that make payments to a taxpayer.

If the IRS finds that you did not report all your income for a specific year, they will start adding penalties and interest to the taxes you should have paid.

They may also refer a taxpayer with a history of not reporting all income to their criminal department for further investigation.

7. Making Math Errors

If you are not using tax preparation software, make sure to verify all your tax return calculations. Math errors are common, especially for more complex 1040 line items.

Whether adding, subtracting, multiplying, or dividing incorrectly, simple math mistakes can lead to a smaller refund or even owing taxes to the IRS. When the IRS catches math errors, they will send either a CP11 Notice (you owe the IRS) or CP12 Notice (you have a new refund amount).

If you are still eligible for a refund after the IRS fixes your math mistakes, expect a delay due to the longer processing time to correct your return.

8. Overlooking or Taking Too Many Deductions and Tax Credits

Deductions and tax credits are intended to put taxpayers in a lower tax bracket, reduce total tax liability, and possibly increase refunds. However, claiming credits for which you are not eligible could result in an audit and further investigation of possible fraud.

Be aware of these common tax deductions and credits offered by the IRS so you can determine which ones you qualify for:

  • Standard Deduction
  • Itemized Deductions
  • Self-Employed Expenses
  • Earned Income Tax Credit (EITC)
  • Child Tax Credit
  • Child and Dependent Care Credit

9. Filing the Wrong Tax Form Schedules

Although everyone will file a 1040 return, some taxpayers must also include additional “schedules” depending on their tax situation. Failing to include the necessary schedules may delay the IRS accepting a return.

If you are owed a refund, it will take longer to receive it. If you owe the IRS taxes, you may be penalized for not paying on time.

Some of the common 1040 schedules are:

  • Schedule A: Itemized Deductions
  • Schedule B: Interest and Ordinary Dividends
  • Schedule C: Profit or Loss from Business
  • Schedule D: Capital Gains and Losses
  • Schedule EIC: Earned Income Credit
  • Schedule SE: Self-Employment Tax
  • Schedule 8812: Credits for Qualifying Children and Other Dependents

10. Entering the Wrong Direct Deposit Routing and/or Account Number for Refunds

Although direct deposit is the fastest way to get a refund, entering the wrong bank routing and/or account number will slow your refund. When the IRS cannot verify bank numbers to make a direct deposit, they will send you a refund check instead.

However, if you accidentally enter someone else’s bank info and they receive your refund deposit, you will have to work directly with the bank to get your refund back.

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