One innocent slip-up on your federal income tax return could cost you time and money. Be sure to double check your return for these common mistakes:
|More from Investopedia.com: |
• 9 Ways to Use a Tax Refund
Top 10 Solutions for a Big Tax Bill
• New Tax Breaks That'll Help You in 2010
1. Wrong Filing Status
You can only choose one filing status -- single, married filing separately or married filing jointly. What determines your filing status is your marital status as of year's end (either single or married). If you are married, it's your preference whether to file separately or jointly. (However, you and your spouse will need to agree on the filing status -- you can't file married separately if your spouse is filing jointly!) Mark the correct box accordingly, or it could cause you to be denied for tax credit claims such as the child or dependent care credit, earned income tax credit, etc.
2. Wrong Address
If you are submitting a paper return, it is best to use the peel-off label on the tax form you received in the mail. You can make corrections directly on the label. However, if you do not have a label or if there are too many corrections, make sure you clearly print your name, address and zip code on the return.
| More from Yahoo! Finance: |
• Little-Known Money-Saving Tax Breaks
• Wackiest Tax Deductions for 2010
• 7 New Tax Laws You Should Know About
Visit the Taxes Center
3. Incorrect or Missing Social Security Numbers
Your Social Security number is a crucial part of your federal income tax return. It corresponds with income reported as well as deductions and credits you are claiming. If you accidentally provide the wrong number, your claims could be denied, or at least delayed until you are able to make the correction with an amended tax return. In addition, the IRS can only verify someone you areclaiming as a dependent if you include his/her correct Social Security number as it appears on the Social Security card. If there have been any name changes since you last filed a tax return, you should contact the Social Security Administration by calling 1-800-772-1213 or by going to its website at ssa.gov.
4. Unsigned Return
After doing all that hard work, don't forget the easy part -- signing the form! Neglecting this important last step could unnecessarily hold up your refund or, if you owe money, you will have to pay penalties and interest on your tax bill. If you are filing jointly, make sure that your spouse also signs and dates the return.
5. Math Errors
Use a calculator and go back over your return carefully to ensure that you have added and subtracted all those numbers correctly. While the IRS Service Center can, and often does, catch math errors and will make changes accordingly on your form, it's not guaranteed.
6. Tax Computation Errors
According to the IRS, in addition to basic addition and subtraction mistakes, filers often incorrectly compute their taxable income, withholding and estimated tax payments, earned income tax credit, standard deduction (for people age 65 or older or who are blind), taxable Social Security benefits and child or dependent care tax credit. Make sure you are using the correct column for the IRS tax table based on your filing status.
7. Incorrect Identification Numbers
If you are claiming a dependent or child-care tax credit, double check to make sure you have the right identification number(s) for the care provider(s).
8. Incorrect Financial Institution Information
If you are owed a refund and elect to have the funds directly deposited into your bank account, make sure that you provide the correct financial institution account and routing transit numbers, or your refund could be delayed or worse -- sent to the wrong taxpayer!
9. Undocumented Deductions
If you are filing an itemized return and claiming charitable contribution deductions, you will need written receipts for each donation verifying the date, contribution amount and name of the nonprofit organization you supported. Other common deductions for which you will need receipts include mortgage interest, property taxes and medical expenses (if they exceeded 7.5% of your adjusted gross income.
10. Wrongly Claiming -- or Forgetting to Claim -- Credits And Rebates
In addition to standard tax credits such as the Earned Income Tax Credit (EITC), each year there are new credits, rebates and deductions for which you may qualify. Last year's top tax-filing mistake was wrongly accounting for the 2008 recovery rebate. Over 2 million tax filers either didn't include the rebate on their return or entered the wrong amount. This year, millions of tax filers will be able to claim the Obama Administration's "Making Work Pay" tax credit that was extended under the 2009 American Recovery and Reinvestment Act (ARRA), as well as the First-Time Homebuyer Tax Credit. If you think you may qualify for a credit or rebate, check the IRS website to find the appropriate form, or consider using tax preparation software that can walk you through a checklist of potential benefits.
You can reduce the likelihood of making tax mistakes by filing electronically through the IRS website or by using tax preparation computer software that can help you avoid, or correct, common errors.
When it comes to filing your taxes, it can often pay to wait until the deadline.