We're all human, and sometimes even the most diligent tax filers among us make mistakes on our returns. But there could be consequences if your federal tax return contains errors. Not only might you incur a penalty, but the IRS might reject your return, causing you to go through the filing process all over again. Here are some of the most common tax mistakes filers make -- and tips for avoiding them.
Continue Reading Below
IMAGE SOURCE: GETTY IMAGES.
1. Making math errors
A simple math error could wreak havoc on your tax return. If you're going to file a paper return, be sure to use a calculator or spreadsheet when crunching your numbers. Better yet, skip the paper return and file electronically. Not only is this a more convenient option, but if you file electronically, you're less likely to make a mistake. The IRS reports that the error rate for paper returns is 21%, whereas it's less than 1% for electronically filed returns. Best of all, if your income is low enough, you can file your return online for free.
2. Entering the wrong Social Security number
You might think you know your Social Security number (and your dependents' Social Security numbers) by heart, but unless you're 100% certain, it pays to bust out your card and check your memory against what's in writing. If you submit a tax return with the wrong Social Security number, there's a good chance it will get rejected.
Continue Reading Below
3. Forgetting key deductions
There are a number of deductions available to taxpayers, but failing to claim those deductions is basically akin to throwing money away. If you're a homeowner, for example, there are several tax breaks you can get, from the mortgage interest deduction to writing off your property taxes. Under the right circumstances, you might also be eligible to deduct mileage on your vehicle, medical expenses, and job-search costs. Finally, don't forget to take a deduction for the charitable contributions you make throughout the year.
4. Missing out on tax credits
Tax credits can save you a significant chunk of money by directly lowering your tax liability. There are a number of credits available to tax filers, but the key is to know which ones to look out for. If you have children, for example, you may be eligible for the Child Tax Credit, as well as the Child and Dependent Care Credit. If you're a student or are paying for a child to attend college, you could benefit from the American Opportunity Tax Credit or the Lifetime Learning Credit. Finally, if you're a low-income household, you might qualify for the Earned Income Tax Credit. Unfortunately, many tax filers miss out on credits each year because they just don't think to claim them, so explore your options before submitting your return.
5. Forgetting additional income
Many people who file erroneous returns do so because they neglect to include side income. It's an understandable slip-up, but a major mistake nonetheless. Whenever you earn income, you're required to report and pay taxes on your earnings. This applies not just to your salary, but to any additional source of money you might have coming in, whether it's a dividend payment or interest in a savings account. To avoid this mistake, be on the lookout for 1099 forms from your bank and brokerage firms, and make sure to report any other type of extra income you bring in.
6. Failing to sign your return
Signing your tax return is probably the easiest part of the filing process, but a surprising number of people forget this final step. The bad news is that the IRS won't process your return if it's missing a signature, so be sure to sign your tax forms before sending them in. If you're filing a joint return, keep in mind that both spouses need to sign for it to be accepted.
7. Missing the filing deadline
You'd think keeping track of the tax deadline would be a simple thing, but it's actually not as easy as it sounds. While the tax filing deadline is typically April 15, that date can shift when it falls out on a weekend or when other circumstances come into play. In 2017, for example, the tax deadline is actually Tuesday, April 18. But whether you're dealing with April 15 or a date in close proximity, make sure to put it on your calendar in advance and get your return in before the deadline. Otherwise, you could face a penalty for filing late.
Making a mistake on your taxes could have serious consequences. To avoid errors, check your return carefully before you submit it, and leave yourself plenty of time to prepare it in the first place. The less rushed you feel when filing your return, the less likely you are to make a critical error.
The $15,834 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $15,834 more... each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after.Simply click here to discover how to learn more about these strategies.
Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.