If you make a careless mistake on your tax return, it may result in a 20% penalty on your tax bill. While this may not seem like much, it adds up.
One of the best things you can do is to be informed when it comes to preparing and filing your personal taxes or business taxes. Keep reading for some financial tips that will help ensure you avoid a penalty or other consequences due to making mistakes when doing taxes.
1. Making a Simple Error
You need to ensure the information you include on your tax return matches what the IRS has on file. This information is acquired from the withholding and income reported by your employers or other sources.
Be sure to double-check things like your Social Security Number and address, as well. You may want to rely on professionals like Tax Hostage to help ensure these simple mistakes don’t occur.
2. Missing the Filing Deadline
You should never ignore the tax filing deadline. If you are aware that you won’t make it, then you need to file for an extension.
Filing an extension with Form 4868 is simple and free. If you don’t do this and don’t file your taxes online, it can result in a five percent penalty on the amount due for each month or partial month your return is late.
3. Math Mistakes
The formulas used by tax forms are tricky. You have to add lines eight to 32 and then multiply by .356 if you have an AGI over $50K, which is an example.
A good way to overcome this mistake is by using tax preparation software to handle the calculations. You can also hire professionals to handle these calculations for you.
4. Omitting Your Extra Income
You need to make sure to keep up with all your additional income sources. Also, confirm early on you have all the required paperwork.
If you need to, reach out to the proper person or business to get the required documents.
If you received income from a source that can’t provide you with the needed documentation, then it’s required that you complete a Form 1099-MISC.
5. Not Signing Your Return
The IRS considereds unsigned tax returns invalid. Even if everything else was done right and you sent your payment, your return won’t be accepted if the return isn’t signed.
This may result in it being late and you being assessed penalties.
Use These Financial Tips when Filing Taxes
When it comes to filing taxes for yourself or business, be sure to use the financial tips above. Proper financial management throughout the year will also make the entire process easier.
If you found the tips and information in the above article helpful, and are looking for more beneficial resources, be sure to check out some of the other blogs on our site. We post new content regularly to help ensure that you stay informed.