The Mistakes a Taxpayer Should Avoid When Filing Tax Returns

The Mistakes a Taxpayer Should Avoid When Filing Tax Returns

The season for filing tax returns often finds people confused and nervous. The IRS assumes the role of an enormous vengeful monster ready to gobble you up. It is very unfortunate, and very common, that a considerable number of taxpayers will postpone filing their tax returns and straightening out tax affairs until the deadline looms high; this is where the nervousness comes into play.

If you are not clear about tax laws, depreciation formulae and deductibility rules, you may find yourself in some trouble. This could also cause you to … Read the rest

The Mistakes a Taxpayer Should Avoid When Filing Tax Returns

The season for filing tax returns often finds people confused and nervous. The IRS assumes the role of an enormous vengeful monster ready to gobble you up. It is very unfortunate, and very common, that a considerable number of taxpayers will postpone filing their tax returns and straightening out tax affairs until the deadline looms high; this is where the nervousness comes into play.

If you are not clear about tax laws, depreciation formulae and deductibility rules, you may find yourself in some trouble. This could also cause you to shell out precious money that would have otherwise been spent on stuff you wanted.

Even minor errors can lead to payment of increased taxes and might possibly lead to delayed or eliminated refunds. As is true of everything else in life, being systematic and extremely careful in arranging paperwork related to tax returns all through the year will ensure a smooth filing of tax returns when the time comes. Be sure that you don’t lose or accidentally throw away any bills, receipts or vouchers related to your tax return. The next step you need to take is to educate yourself about the IRS’ rules and regulations. Do no blindly believe other people’s opinions. Look up the facts for yourself.

Making tax return errors is very common, even CEOs of companies, VPs and professors are no exceptions. Read on to know some common mistakes which should be avoided at all costs.

  1. Mistakes are often made in the context of benefits claimed for dependent children. Not being fully aware of the allowed exemptions might lead to failure in making a correct claim or cause an erroneous claim. The IRS, in an attempt to clear common confusions, specified the definition of ‘child’ in 2006, with the details available at http://www.bankrate.com/brm/itax/tips/20010208a.asp. If this does not answer your question, refer to a dependable source before proceeding with filing your tax returns.
  2. The most common types of mistakes that occur in tax return filing are calculation based ones, caused by mistakes made while entering the digits. Cross check to make sure the full stops and the commas are in the right places. Stay patient while dealing with the figures and check the total on two separate days. Requesting a family member or friend to check the total might be a good idea. Usage of tax software programs might make things easy for you. It should be noted that the IRS compulsorily checks entries against W-2, 1099 and other statements relevant to your tax. Make sure that your return does not have a discrepancy because they would spot it and that would lead to problems and delays.
  3. If you forget to sign the tax return and insert the date, the IRS will not process your tax return. Once you are done filling, run through it carefully to see that you have not missed any minute details on any page. Also, make sure that you have written your social security numbers or tax ID numbers correctly.
  4. Another common mistake is forgetting to submit all the relevant forms, for example, W-2, 1040, or 07, or 16. It is important to check the relevant schedule for each claim and to make sure that all the required and supporting forms are attached with the tax return.
  5. Taxpayers often fail to keep track of investments, interests they have paid or earned, allowed deductions etc. it is vital to maintain records of your investments, dividends you have paid, taxes deducted on maturity (if any), taxes paid previously, capital gains etc. Keeping a thorough track of taxes paid would prevent you from paying taxes on the same amount more than once. One should be very careful and systematic while making these calculations to avoid mistakes.
  6. A lot of taxpayers utilize the long form when actually the 1040Ez is more suitable for them. The 1040Ez is enough, and the long form not necessary, for people whose income, expenses and related things are simple and straightforward. Many of us are not aware of the amount it is possible for us to save in taxes. The long form has provisions for deductions from taxable income in lieu of student loan interest, contributions to charities, alimony paid etc.
  7. A lot of taxpayers fail to submit by the deadline and ask for an extension. This attracts penalties along with interest. In cases due to unavoidable circumstances, where you fail to submit your tax filing by April, you need to submit form 4868 by the April deadline in order to be allowed an extension.
  8. Many taxpayers end up using the wrong table for calculations. One needs to be very careful about two things in particular: using the appropriate tax tables and filing status. If you use the wrong tables or file under an inappropriate status, you may find yourself to be in hot soup. The error could even translate to paying extra taxes on income derived from investments. Be very careful and calculate your taxes through the use of the worksheet at the back of the booklet.
  9. Two very common mistakes taxpayers end up making while filling their tax returns are; entering the wrong details in the check and forgetting to sign the check. A lot of taxpayers also post the forms without attaching the proper postage on the return package. It is also mandatory to use the printed label and envelope that the IRS provides.

The IRS has made its tax filing systems modern and a number of the errors mentioned above can be prevented by opting for electronic tax filing. It was calculated that last year over half of the tax returns were filed using e-filing. There are many advantages of pursuing electronic filing. The forms that you would use for the purpose are on tab, the software provides you with a step by step guidance to complete the filling process, the electronic calculator minimizes the chance of errors and most importantly, the e-filing forms take a short time to be processed, the turnaround time being 14 days. For details, visit http://www.irs.gov. In case you are not sure about the process, you can request the help of an authorized tax professional.

Make sure that you file your taxes on time and accurately. This will prevent heartburn and hypertension.

Checking the Status Online of Your Tax Refunds

Checking the Status Online of Your Tax Refunds

It might feel good to know that there is a tax refund waiting for you. Congrats! The most common question asked by every expectant taxpayer is; “Where is my refund?” Check status of your refund online.

The quickest and easiest way to check your tax refund is asking the IRS through their web site www.IRS.gov. There is a link called “Where’s My Refund?” on the home page itself. It’s fairly simple to use this service. You only need to have your tax return copy so as to be able to provide the … Read the rest

Checking the Status Online of Your Tax Refunds

It might feel good to know that there is a tax refund waiting for you. Congrats! The most common question asked by every expectant taxpayer is; “Where is my refund?” Check status of your refund online.

The quickest and easiest way to check your tax refund is asking the IRS through their web site www.IRS.gov. There is a link called “Where’s My Refund?” on the home page itself. It’s fairly simple to use this service. You only need to have your tax return copy so as to be able to provide the required data for getting the refund status. To be specific, you will need your social security number, the filing status, and the refund amount. The basic reason for asking about this information is for your personal security; the agency tries to make sure that it is dealing with a genuine taxpayer. Moreover, your return also should have all this information. Otherwise, there might be something wrong.

After inputting all this information, a results page should appear that will show certain messages like:

(i) Return received and it is under processing

(ii) It might show you the expected date for direct deposit of refund or the mailing date

(iii) Refund not issued because of some delivery problem

Sometimes, it might tell you that your return is reviewed by the IRS due to some error or doubtful entry. In situations like this, you should rush on to some expert tax professional and get your return reviewed to make it error-free.

How long should you wait before checking?

In case of electronic filing, the refund status normally becomes accessible after 48 to 72 hours from the actual time of filing your returns. As the return comes into the data base in electronic format, so the system should get very quickly updated. In case of non-electronic filing of your returns, you won’t be able to check status of your return before 3 weeks or sometimes even more. As the IRS receives a lot of returns in paper format, so it takes a plenty of time to enter all the data into the data base.

How much time does it normally take to receive your refund?

The time needed for issuing a refund depends upon the way the return is filed. In case you filed a paper return and sent through regular mail, then the refund could be expected within 6 to 8 weeks after the IRS receives your return. And in case of electronic return filing, you can expect the same within 3 to 4 weeks time. In case you gave preference for direct deposit of the refund in your bank account, then simply take off 1 week from the above calculations.

Must I File a Tax Return?

Must I File a Tax Return for 2009?

The short answer to this question, do I have to file a tax return, is yes if your income is above the level required for your filing status. But a couple additional pieces of information affect the answer including your age and the source of your income. IRS.gov is a great resource for the exact tax rules.

In addition to the requirement, it makes sense to file a return to get a refund on any taxes that you did pay during the year. There is the special tax credit, Making Work … Read the rest

Must I File a Tax Return for 2009?

The short answer to this question, do I have to file a tax return, is yes if your income is above the level required for your filing status. But a couple additional pieces of information affect the answer including your age and the source of your income. IRS.gov is a great resource for the exact tax rules.

In addition to the requirement, it makes sense to file a return to get a refund on any taxes that you did pay during the year. There is the special tax credit, Making Work Pay, that is refundable to you even if you do not meet the income requirements to file. A government pension could provide you with a tax credit that will be refunded to you. The Earned Income Tax Credit will also refund money to you beyond what you have paid into the tax system. And there are a number of other tax credits that you might qualify for that you can receive a refund on without having earned enough to file.

Now, if you were self-employed during 2009 and earned over $400, you must file a return regardless of other factors. If you owe special taxes on retirement plans or medical savings accounts, you must file a return for 2009. If you work for tips and need to pay social security and Medicare tax, you need to file. If you need to pay the Alternative Minimum Tax or any recapture tax, you need to file a return. And finally, if you work for a church and your income is greater that $108.28.