Over the last 20 years we have had the opportunity to work with many clients in various different professional fields. One item they all have in common is the need to complete an annual tax return. We draw from these experiences to give you the most common tax mistakes we have seen in “Letterman like” order of frequency.
12. Missing extension deadline-Do not forget to file an extension if you are not able to make the filing deadline, extensions are easy, important, but very costly should you forget
11. Basis- Under current tax law you most likely have a basis on every item you own, be sure to include it on your reporting records, otherwise the IRS will include it with a zero basis/all capital gains
10. Not filing when needed to: When someone becomes deceased it is a very good idea to file a final return to notify the IRS, also even if your income falls under the limits for filing, often times it is necessary to file a return if there were investment or expense events in the tax year
9. Medical deductions many times are not deductible due to the limitations of inclusion, but occasionally medical expenses may drift over the inclusion areas, and tax laws change frequently; it is a good practice to keep medical records and expenses no matter the end deductibility
8. Rounding deductions: Be exact on all items, a sure way to raise a red flag is to round all of your deductions even if you are rounding down, the IRS wants and rightly expects exact numbers
7. Duplicate social security: If you switch employers during the year, it is highly likely you may have over withheld Social Security taxes, as each employer holds per his time frame of employment, the end result will be a refund of your over withheld taxes, if this occurs
Tomorrow we will complete the list and also offer a few tips and resources to help in this year’s federal filing requirements!
Have a Great Day!