Mistakes on a tax return can lead to needing to file an amended return and a delay for your refund. The last-minute rush often causes taxpayers to create basic errors on their return. When reviewing your return before filing, check for these tax mistakes:
- Incorrect Social Security Number (SSN)
Match your SSN with the number on your Social Security card. If you are filing jointly, ensure that both you and your spouse’s SSNs are included.
- Selecting the Wrong Filing Status
This is one of the most common mistakes taxpayers make. Often, they file as Head of Household instead of Single. If you are unsure of which filing status you should use, review information at the IRS Interactive Tax Assistant.
- Not Reporting Foreign Income
U.S. citizens and resident aliens are required to report and pay taxes on their worldwide income. Income earned anywhere in the world must be included on a U.S. tax return. Even if taxes have already been paid in the country in which the income is earned, the income needs to be reported to the IRS. Not reporting income can be seen by the IRS as willful evasion of taxes.
- Errors in Claiming Deductions
Claiming deductions that a filer does not qualify for can lead to an audit or owing of back taxes. Many business owners and individuals claim baseless deductions that the IRS rejects. If you have an unusual expense that you believe can be deducted, seek advice from a tax professional.
- Mixing Personal with Business
Taxpayers often mix personal and business expenses. Be careful of occasions when it becomes difficult to separate these elements. For example, hosting a dinner to discuss business with a professional who is also a friend is a gray area. In such situations, remember this simple rule: if the activity is solely done for business, then you can make the deduction.
- Wrong Bank Account Numbers
The IRS sends your refund to the bank account number(s) you share on your return if you choose Direct Deposit. Therefore, it is important to include correct bank account number(s) on your return.
- Forgetting to Sign
Signing is the last thing you do before filing your return. Many taxpayers forget to sign their return, especially when they’re in a rush. Whether you are efiling or paper filing, an unsigned return is considered invalid by the IRS.