The worst thing you can do is completely fail to file your taxes and ignore any further attempts from the IRS to contact you. If the IRS has reason to believe that you’re intentionally and willfully avoiding your tax obligations, they can pursue a whole host of actions against you, read more to keep the IRS far far away.
Have you ever heard of forosophobia?
Psychology experts have identified the phobia of tax returns and the IRS as a real psychological condition. According to these experts, thousands of Americans currently struggle with feeling terrified of filing their taxes because they feel it’s something more than what they can mentally handle.
As a result of this phobia, taxpayers can develop bad habits like ignoring correspondence from the IRS, failing to file returns, or even making mistakes that could’ve been avoided with a little tax help from an expert.
Are you trying to avoid making errors on your next tax return? Getting informed about some of the most common mistakes can help empower you to do your tax returns accurately and efficiently. Learn more about the top seven mistakes that could derail your tax return and how to avoid them below.
One of the most common tax return mistakes is missing the tax deadline. “Tax season” is usually defined as the months of February and April, because that’s when most taxpayers file their taxes. The tax deadline every year usually falls in mid-April.
If the tax deadline is rapidly approaching and you still haven’t filed your taxes, you’re not out of options—you can file for an extension. That’s a better option than doing nothing.
If you don’t file for an extension and don’t file your taxes in time, you’ll likely end up paying a late fee when you file.
You can avoid this common mistake by putting “Tax Day” on your calendar and dedicating a specific day to getting your taxes done. Even better, consider scheduling an appointment with a tax professional to ensure that you file your taxes before the due date. Not only will you feel more confident that you’ve met the IRS deadline, but you’ll also feel more assured that you haven’t made any mistakes!
Choosing your filing status (married, single, head of household, etc.) seems straightforward, but it can get pretty confusing for taxpayers who aren’t familiar with all the terms, meanings, and implications of these filing statuses.
You’ll need to choose a status to file, so filling out this important detail is often one of the first things you’ll do. Depending on your circumstances, you’ll either be single, married filing jointly, married filing separately, a qualifying widower, or the head of household. If you’ve never been married and don’t have dependents, then you’ll file as single. If you have dependents but are not married, then you’ll file head of household.
Choosing the right filing status is crucial, so it’s advised that you reach out to a tax expert if you’re not sure which category you fit into. Filing under the wrong status could leave you liable for more taxes than you really owe, or it could result in action from the IRS, including a potential audit.
One common symptom of forosophobia, the fear of filing taxes, is tax avoidance. Do you tend to avoid anything and everything that has to do with filing your taxes? If so, you’re also likely to ignore IRS mail, e-mails, or other correspondence.
If the IRS sends you mail, you need to read it to stay informed about what’s happening. An IRS letter might not be all bad, by the way—it could be an indication that your tax return is on its way, or it could be a notification about a change. Either way, you won’t know how to respond or what action you need to take if you disregard the letter.
Seeing mail from the IRS can be shocking at first. It’s okay to pause and save the letter for when you’re ready to open it, but don’t wait too long. If you’re struggling, have a loved one open the letter and tell you what it’s about. Otherwise, bring it to a tax expert who can help you further understand the scope of the issue.
Submitting incorrect identifying details on your return is a major faux pas. The last thing you need is to make a typo on your legal name, address, or account numbers—one minor error could create a major disaster. Imagine putting in an inaccurate account number, only to have your refund returned to the wrong bank account!
Avoid this mistake by making it a habit to double- (and sometimes even triple-) check all your forms and returns before electronically submitting them or physically mailing them in. It’s also advised that you consider using an electronic tax return, as statistics show that digital returns have fewer errors than paper tax returns.
The only thing worse than filing an incorrect deduction or credit is missing out on the one you rightfully deserve! Deductions, expenses, and credits all work together to help reduce the overall amount of taxes you owe and increase the tax refund you can collect. Making an error on these details can lead to an incorrect assumption about your taxes and cause you to be on the brunt end of an IRS audit.
A tax dispute can result when you use improper deductions, credits, or expenses, ending up with you fighting the IRS. If you’re confused about how to fill out your return properly and include those details, seek out an expert’s help.
Did you know that an IRS tax return isn’t valid unless signed? This holds true regardless of whether you file your return on paper or electronically.
If you forget to sign your return, it won’t be valid.
Keep in mind that this also applies if you have a spouse—they need to sign the return as well.
Failure to File
The worst thing you can do is completely fail to file your taxes and ignore any further attempts from the IRS to contact you. If the IRS has reason to believe that you’re intentionally and willfully avoiding your tax obligations, they can pursue a whole host of actions against you, including
• Tax liens
• Tax levies
• Wage garnishment
• Criminal charges
• Fines and penalties
You can avoid these collection efforts by filing your taxes and paying them on time. If you’re worried that you can’t meet your tax obligations when they’re due, it’s still important to file your taxes on time. You can work with the IRS and arrange a payment plan to ensure your tax debt is reconciled.
The longer you wait to file your taxes, the more likely you are to pay higher and higher amounts in fees, penalties, and interest.
Are you preparing to do your taxes for this year or for years past? If so, recognizing and avoiding these seven mistakes can help make the process much smoother. If you do end up making an error on your return, then don’t panic!
You can use tax Form 1040-X to identify and correct any errors you’ve made on your prior returns.
Do you have more questions about remaining compliant with tax laws? Are you hoping to have an expert overlook your tax documents to ensure your legal bases are covered? If so, our office can help. Contact our experts to discuss your tax questions and concerns with one of our best attorneys.
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