Even the smallest errors could cause a delay in your tax refund or additional tax liabilities. Below are a few careless, but common, mistakes made on tax returns. Pay special attention to make sure you get your tax refund back on time and avoid potential issues. Best practice is to consult with your tax advisor for more suggestions and individual tax guidance.
These six tips could help you avoid common mistakes:
- Don't miss out on deductions.
Three commonly overlooked deductions include (1) state sales tax paid, (2) tuition and fees, and (3) educators' out-of-pocket expenses. Don't forget to include these deductions, where applicable, on your tax return or you could be missing out on a very valuable deduction.
- Itemize when possible.
According to the General Accounting Office (GAO), more than two million taxpayers simply file the standard deduction as opposed to itemizing. In some cases it is more beneficial for you to itemize your deductions. Failing to itemize deductions could result in over paying.
Consider itemizing:
-mortgage interest
-medical expenses (health insurance premiums, prescriptions)
-state and local income tax and personal property tax
-charitable contributions
-out-of-pocket job expenses not reimbursed by employers
- Count your charitable contributions.
Did you make a donation last year? If so, don't forget to account for your charitable donations. Remember, donations don't have to be large items such as cars; they can be small cash donations. Be sure to follow the rules on tax donations to ensure you are reporting accurately.
- Save your receipts.
In order for you to claim items for deductions, you must have proof. Therefore, you should file your receipts in a safe place throughout the year. Consider using shoeboxed.com as a way to stay organized. As a rule of thumb, hold on to your deductible receipts and checks for at least three years.
- Double-check your work.
In addition to the commonly overlooked items noted above, a majority of tax delays are caused by simple mistakes. Double check:
- the deadline
- mathematical calculations
- signatures and dates
- your personal information
- the mailing address on the outer envelope