When you make mistakes in your tax filing, it can cost you money. Unfortunately, most people are too busy to double-check their tax information before filing it with the Internal Revenue Service (IRS), so it’s possible to overlook errors with what is filed.
You may end up owing more taxes (with interest and penalties), miss out on a larger refund than you claimed, or get an IRS audit due to errors. To avoid making costly mistakes that will require future tax resolution, you need to know how to avoid making them.
5 Tax Resolution Mistakes (and How to Avoid Them)
To have a smooth and successful filing experience with the IRS, you have to be aware of the most common tax resolution mistakes people make.
Mistake #1: Paying taxes with a credit card
Paying your taxes with a credit card seems convenient. However, unless you plan on paying your credit card bills right away, you should avoid doing this. If you do so, you’ll have to pay high interest rates and additional convenience fees.
Mistake #2: Failure to proofread all needed information
There is a lot of data involved in tax preparation, so make sure that you include everything needed and that all input is correct. Always proofread and check for typo errors, especially in areas that state your basic and financial information.
Checking for typos is crucial because it’s very easy to interchange or leave out numbers. One mistake can distort the outcome of your whole tax return. For example, your traditional retirement account (IRA) contribution should be $5,200, but you unintentionally entered $2,500 as the deduction on your return. With this, you just missed out on a $2,700 deduction, which can increase your tax liability.
Mistake #3: Choosing the incorrect filing status
The five filing statuses are:
- Head of household
- Married but filing separately
- Married and filing jointly
- Qualifying widow(er) with dependent child or children
When you prepare for your tax filing and tax resolution, you need to choose your filing status accurately. Many U.S. citizens select the wrong filing status or a sub-optimal filing status.
When you pick the wrong filing status, it’ll throw off all your tax numbers because your status determines your deductions, filing requirements, and credit eligibility. There are distinctions between these different statuses, so it’s best to know your filing status.
Mistake #4: Failure to ask for an extension
Not everyone can prepare their taxes on time. Understandably, you’re most likely busy, and doing your taxes is not even on your daily to-do list. If you foresee that you will not make the tax deadline and expect to file your taxes late, you could request an extension in advance using Form 4868. When you submit the form, you get an extra six months to file your taxes.
You can pay what you expect to owe the IRS in full or partially when you ask for an extension. On the one hand, the extension doesn’t relieve you from having to pay the taxes you owe by the deadline; it just gives you more time to put together your tax information and file it. On the other hand, when you don’t ask for an extension, you can face additional costs by the time you’re ready to file.
Mistake #5: Sending your return to the wrong IRS office
Every year, many taxpayers send their tax returns to the incorrect IRS office address. There are different IRS office addresses for certain regions and types of tax documents, so it can be confusing if you’re filing for a paper return.
If you send your return to the incorrect processing center, you’ll most likely delay the processing of your return and any refund due. To avoid this dilemma, you can check the IRS website for the correct address of where your returns should go. You can also save yourself the headache by e-filing.
Take the Time to Today to Save Dollars in the Future
When you make a mistake with your tax filing, it usually doesn’t result in a full-fledged audit. Generally, your refund will be delayed until everything gets sorted out. But, depending on your mistake, you may shell out more money than expected. With this, it’s best that you triple-check all your tax information before you send it out to the IRS to save you the hassle and unexpected (and undresired) expenses in the future.
Another way to significantly reduce your chances of making an error is to seek professional advice. Tax Samaritan has been a provider of professional-quality tax resolution services to expats since 1997. We can help you ensure that your tax filings are accurate before sending them out to the IRS.