With just over a month to go before the Tax Man comes around, many consumers are scrambling to get their receipts and W-2s in order so they can file their taxes and hopefully get a nice refund check. With so many people in such a mad rush to get their returns out the door in time, mistakes are bound to happen.
And mistakes on some of the most important documents you’ll file all year aren’t exactly something you want hanging over your head.
With that in mind, I thought I’d take a break from my credit repair company to provide you with a few of the most common tax mistakes to avoid.
Avoid These Common Tax Mistakes
Not Filing on Time
They say procrastinators are the leaders of tomorrow, but waiting until the 11th hour to file your tax returns is not exactly the best idea. While you’re not exactly alone in your decision (the IRS reports that up to 20% of Americans wait until the last week to file), you’re still causing a fair amount of undue stress on yourself. Racing to gather your financial records together can be stressful enough without having to worry about a looming deadline.
And if you are late? Then prepare for a world of hurt, as the IRS starts hitting you with interest payments (which are compounded daily) as well as penalties for filing late which can vary based on how much you owe and how late you file. Now, you’re looking at paying even more in taxes than you may have had to in the first place.
Missing Critical Information
Worse than making some math mistakes is screwing up some aspect of your personal information. Mixing up your social security number, or incorrectly filling out your bank’s routing information may explain why that refund check hasn’t arrived yet. These errors are typically common with people who wait until the last minute to file their tax returns – just one more reason to file early.
Shredding your return
While I normally recommend slashing any type of financial documents you have after a time (in order to protect your identity and credit from scams), one document you’ll want to keep in one piece is your tax return. If you’ve ever found that you’ve messed up on any of your back taxes, you’ll need these to help set your records straight.
Filing the Wrong Forms
Many people put off filing their taxes mainly because they hate the idea of trying to decipher what it is they need to do in the first place. Luckily, most people only need to use the appropriately named 1040EZ form when filling their returns. Only those who need to worry about itemizing their deductions or report self-employment income need to worry about the longer forms.
Not Filing at All
Maybe you’ve already missed the filing deadline or maybe you just think you’ll end up owing the government more than you can afford to pay. Whatever the case may be, deciding to not bother filing taxes is not the best of ideas. Not only could you be missing out on a potential refund, but choosing to simply ignore your taxes won’t make them go away either. It looks bad on your financial record, and if ignored long enough, could leave you in need of credit repair services before you get back on track. If you think you need help paying up, the IRS offers options to file applications for extensions (up to six months to file), as well as outlining payment plans. Both go a long way towards making filing your taxes just a little less painful if you didn’t save the date.
This is a guest post from Marc Chase, President of Product Development for My Credit Group, a website dedicated to helping consumers with managing their credit.