Welcome to 2013! Now that the festivities of ringing in the new year are behind us, it’s time to think about filing your income tax return. Over the next month or two, you’ll likely be spending at least one full weekend calculating your taxes, pouring over the changes to the tax laws and looking for errors.
To help you complete this task more efficiently, HH Staffing Services has compiled a list of the most common tax related mistakes you can easily avoid. Many of them will put more money in your pocket, and that’s always a good thing!
(After you’ve finished with those taxes, it may be time to check us out for a career change. As a full service staffing agency, we match more qualified professionals with more jobs in Sarasota, Orlando, Tampa, Clearwater and Bradenton!)
Okay…back to taxes.
10 Most Common Tax Mistakes
1. Failing to take advantage of tax preparation software – A lot of us are do-it-your-selfer’s, and most of the time that’s a commendable quality, but when it comes to taxes, we don’t recommend going it alone. Be sure to use commercial tax preparation software, such as Turbo Tax. This will drastically reduce the chances of committing virtually every mistake you’ll see listed below!
2. Failing to file electronically – Filing electronically is by far the most efficient way to file your income taxes these days. Not only will you get an instant confirmation that your taxes have been received and accepted, but you’ll be updated on the probably day of your return. If you choose to mail your tax return to the IRS, be sure to send it via certified mail.
3. Forgetting to hang onto your receipts – This one should be pretty obvious, but in the case of an audit, you’ll be required to produce all receipts for deductions, business related purchases, medical bills and charitable donations. Even if you purchase items or donate online, be sure to print out your receipts and file them.
4. Forgetting to change your address – You may have moved since last April. If so, you’re required to file IRS Form 8822 to notify them. If you don’t receive your mail from the IRS because it went to the old address, you’ll still be responsible for its contents.
5. Claiming a home office deduction – If there ever was an audit magnet, this is it. Home offices have a bad reputation, and for good reason. Many people use home offices incorrectly, are too liberal in their application of tax law, and don’t properly complete all the necessary forms.
6. Forgetting to report forgiven debt – Debtors will have reported your forgiven debt on a 1099-C. Guess what? This counts as income and you are required to pay taxes on it.
7. Failing to report debt paid by your employer – If your company paid for any debt that would normally be your responsibility (like a student loan) it’s considered reportable income.
8. Forgetting to pay payroll taxes for domestic help – If you do happen to use the services of a nanny, housekeeper, home health assistant, don’t forget to include that in your taxes.
9. Paying your tax bill by credit card – If you owe the IRS money, using your credit card to pay the bill is a costly mistake, because you’ll end up paying an additional 2.5 percent, which is the amount that the merchant usually pays. The IRS is not a merchant and doesn’t pay this fee.
10. Double dipping when claiming children – If you’re divorced, make sure the two of you agree which spouse will be claiming the children. If both of you do, the second person to file will have his or her return rejected.
Avoid these mistakes, file early if you can (just to get it behind you) and have a prosperous and happy 2013!