Filing annual or quarterly taxes is often overwhelming and daunting for individuals who are unaware of how to do so and how to do so efficiently. Understanding some of the top potential tax mistakes that may get you audited is a way to ensure you are moving forward in the right direction whether you are single, married with children or if you are filing taxes on behalf of your business venture. The more you know about filing taxes the easier the process becomes in time, keeping you out of the eyes of the IRS.
Filing Without Assistance
A major mistake when filing taxes is doing so on your own without assistance from professionals or without the use of online software and programs made readily available today. Filing your own taxes is only recommended if you are familiar with the process and have a clear understanding of the forms that are necessary and required for your filing individually. Always be sure to reference the official website of the IRS to determine whether or not you should submit a different form whether you own a business and whether you are married and have children or not. Take the time to research different software and online services that are available for filing taxes to determine the best route.
One of the biggest mistakes made when filing taxes for individuals and businesses alike is overestimating the deductions you believe you are entitled to personally or from a business standpoint. Understanding how to calculate deductions and determining the deductions you are qualified for is essential when you are looking to increase your refund while helping to reduce the overall costs of your taxes. When you want to work in deductions but you are unfamiliar with the filing methods and system in place it is highly advisable to work together with a consultant or to hire a professional to guide you through the proper process.
Earning Too Much or Too Little
The IRS is much more likely to audit individuals and businesses that are bringing in more than $1 million dollars in revenue annually as well as those reporting they are not earning income along with individuals not filing at all. Keeping your income at a modest level is a way to reduce the risk and chance of having your taxes audited, regardless of whether you are filing personally as an individual or if you are filing for a corporation you own.
If you choose to avoid honesty when filing your taxes with the IRS, you are taking a risk that may end up in months of auditing, regardless of your income level and whether you are filing single, married or if you have dependents. Claiming dependents or choosing deductions that are invalid are the quickest ways to find yourself on the radar of the IRS.
Maintaining honesty is always the best policy when filing your taxes. Even if you believe you are capable of claiming more deductions than necessary, it is not worth the risks of being audited, fined and potentially criminally charged. To ensure you are properly filing your taxes without issue it is always best to consult with a professional CPA or a specialist who works in a tax-filing service. Getting additional opinions on your taxes this year is a way to reduce stress while allowing you to move forward through the year without worry.
Not Checking Your Numbers Before You File
Any time you are preparing to file your taxes it is imperative to check and recheck your numbers thoroughly. Reviewing your income, estimated deductions and donations ahead of time is a way for you to feel reassured before submitting and filing your taxes officially. Always review your taxes more than once in-depth to ensure they are all filed correctly, reducing the chances of a delay in your return or the possibility of getting audited.
Take the time to carefully review banking and income statements for the past 12 months to verify you are not missing reporting any undocumented income. Determine which credits you are eligible for based on your state, city and whether you own or rent a home. There are credits for those who are first-time homeowners as well as for those who require additional support with housing and food, so make sure to double check.
Understanding a few of the riskiest mistakes individuals tend to make when filing their own taxes is a way for you to avoid similar pitfalls. Taking the time to carefully calculate taxes owed as well as deductions you and your household has is a way to alleviate stress while reassuring you are able to get your taxes filed by the deadline and without further extensions required.
Jessica Kane is a professional blogger who focuses on personal finance and other money matters. She currently writes for Checkworks.com, a leading supplier of personal and business checks.
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