Tax season is here, which means it’s time to file your return. If you’re dreading this process, don’t worry! There are plenty of ways to steer clear of the tax mistakes that could result in a hefty fine, jail time, or a troublesome audit. Here are four common tax mistakes to avoid when filing your return.
Mistake 1: Never reviewing your tax withholdings
Your tax withholdings are the taxes taken out of every paycheck and are determined by the number of deductions you’ve listed on your W-4. If you get a tax refund every year, then you should absolutely adjust your withholdings for the next year as that’s money you could be using now instead of waiting until April to get it back.
If you’ve ever gone into debt and needed to use a debt consolidation loan calculator, then you know how crucial it is to ensure you have enough money to cover your bills on time (or early) and in full. Don’t let the government get an interest-free loan from you, especially if you’re struggling to make ends meet or are trying to get out of debt. Adjust your withholdings so you can have more money in your pocket on a monthly basis.
Mistake 2: Making easily-avoidable errors
Silly mistakes like accidentally swapping the digits of your social security number or making a typo in your address can be easily avoided if you review your info before hitting that “File Your Return” button. Take 5 minutes to review everything in your return and ensure it’s accurate.
Mistake 3: Missing out on eligible self-employment deductions
If you’re self-employed, you should take advantage of the deductions you’re eligible for, especially since self-employment taxes are so high. Remember that the supplies you use for your business and the space you use for a home office are all eligible deductions. Don’t feel like you’re doing something wrong simply by utilizing the benefits our government gives small business owners like you to help offset those 15.3% self-employment taxes.
Mistake 4: Trying to beat the system
Attempting to take deductions or tax credits you’re not eligible for may catch up with you eventually, and you’ll need to pay them back with interest and penalty. While you might get an extra $50 back now by trying to game the system, getting caught could result in paying way more than that $50 and might even result in jail time should your fraud charges become severe enough.
The bottom line
When it comes to taxes, the IRS is a force to be reckoned with, so it’s crucial you don’t try to get cute with your deductions. However, tax law is so complex that many don’t know they’re doing anything wrong and can get into serious trouble for minor mistakes. Pay attention to these four all-too-common tax mistakes and have your return double-checked by an accountant before filing to ensure everything is above board.