Avoiding Mistakes

With the prowess and convenience of online tax preparation software and e-filing, the most common tax mistakes can be avoided before they wreak havoc. But even the most amazing tax program and tax calculators can’t save you from yourself. 99% of all tax errors result from human error; thankfully a little extra diligence can prevent most of them.

The Joys of E-File and Tax Preparation Software

Using an E-File program can save even the most die-hard procrastinators from several uncomfortable situations. As long as you hit the “file return” button before 11:59 pm April 15th your tax return will make it to the IRS before you get hit with failure to file penalties. But beware – if you owe the government money they’ll expect the check by the April deadline as well and mailing a check still requires at least a week mailing time to be on the safe side. If the bank account is running a little short when it comes time to write Uncle Sam his check don’t think you can buy yourself some time by “forgetting” to sign the check. You’re not the first person to try it and frankly it doesn’t work. All it will get you is a returned check fee and maybe even some late payment penalties.

Using a computerized tax preparation program will also save you from most math errors; however, the old adage still applies: Garbage In, Garbage Out. Take your time and make sure you enter all information correctly in those first few steps. The program won’t know if you transposed a number when entering your income, it will assume the information you entered is correct and make the associated calculations. If you do have to calculate a sum, check it twice before you put it in. A little extra care can go a long away when it comes to keeping the IRS away from your doorstep.

• As you enter data take a look at the results it creates. Does it look logical? Are the numbers you’re entering similar to last year’s entries? Is the amount to be paid or refunded similar to last year?

Lining Up Your Ducks

Remember all those pieces of tax information we told you to save? Well here’s where they come in handy and having them all together can save you hours of hunting and guess work. Knowing how much you made, how much you spent and which of those expenses resulted in a tax deduction is crucial to tax time success. Figures like your W-2 income, mortgage interest and educational expenses automatically get submitted to the IRS. When you fill in those numbers on your tax return you’re going to want them to match the information the government already received and if they don’t you’ll need the documentation to show why. Tax returns are no place for guesstimations; Uncle Sam doesn’t like that game and has a tendency to AUDIT those who play it.

Slow and Steady Saves the Most Money

Tax deductions can be tricky. There are lots of ins and outs to what is tax deductible and for whom it applies. If you’re up for an adventure read the IRS Publication 553, but for most of us, just using some extra patience and having the right documents, tax estimations and tax calculations can add up to hundreds of dollars back in your pocket. When in doubt, consult a professional CPA. His or her expertise could easily save you enough money to pay their fee and still have extra money left over.

Check It Once, Check It Four Times

So you’ve made sure the information on your W-2 was correct, carefully entered in all information, double checked any math you preformed and carefully looked at all your deductions to make sure you didn’t miss any. Those of you who owe the government money also remembered to make your check payable to The United States Treasury and signed the bottom of the check. Those of you getting a tax refund entered in all the correct banking information for your direct deposit, right? You also remembered to double check that the government has your correct address and social security number, didn’t you? Don’t take the little details for granted. Any mistake on your 1040A or 1040EZ tax return can cause, at the absolute least, an unnecessary delay in processing. For the very unfortunate they can also result in penalties or worse.

If you’re mailing in a paper return (but why would you do that?) make sure all forms are signed, dated and all attachments are included. And last but not least, make sure you mail them with sufficient postage to the correct address! Not all tax returns go to the same place.