If you search online you’ll find countless websites that offer DIY tutorials for just about everything. If you need to change your muffler, you can find how-to video for that. Do you need to hang a flat screen TV in your living room? You’ll find videos for that too. Yet regardless as to how comfortable you are in the DIY realm, there are still a few tasks you’ll want to leave to an expert—and tax preparation is among them. Below are just a few common mistakes people tend to make when they prepare their own tax returns.
Lots of taxpayers misspell their names on their tax returns, and in some cases, people have been known to input their Social Security numbers incorrectly. If that number is transcribed incorrectly, your entire return can be in jeopardy. If your full legal name is Jonnathan Jones Smith but your tax documents read John J. Smith, your return could get flagged by the IRS. If your return is rejected, this could lead to a delay in your refund.
Forgetting to add all income information
Did you get a $300 bonus from your bank for opening a checking account last year? Do you have several sources of 1099 freelance income? If so, this would have been reported to the IRS. If the income you report doesn’t match up with what the government’s computers have on file, you could face a financial penalty.
Not knowing whether to itemize or take the standard deduction
If you have various deductions, such as student loan interest, medical expenses, childcare expenses, mortgage interest and charitable donations, but you automatically take the standard deduction, you could be leaving money on the table. Additionally, if you have deductions that you know you’re entitled to (such as business mileage on your car) but you’re concerned that adding it will cause your return to get flagged, this could lead to a higher tax bill.
You’re not aware of changes in the tax code
The US tax code is complex and it changes constantly. If you’re not up-to-date with changes to tax brackets, tax breaks and the standard deduction, you could wind up with a higher tax bill.
If you need help preparing your 2020 taxes and you’d like to speak with an expert, we can help. Call Hughes, Snell and Co., PA today to schedule a complimentary virtual consultation.