Preparing your taxes is a task similar to mating with an elephant. It takes a long time, there is a lot of screaming, and at the end you usually get a headache. All of this can lead to errors in your return.
Most taxpayers aim to tell the whole truth and nothing but the truth when filing their returns. By the time you’ve completed your eight worksheet related to line 27, subsection A of the 1040 form, you won’t know if he’s a liar or a saint. Everything is so confusing that it can bring a person to his knees. Confusion and frustration of course lead to mistakes. Mistakes lead to unwanted attention from the IRS. Well, all the attention from the IRS is unwanted, but you get my drift.
Ironically, it’s mistakes with the basics that get most people into trouble. The IRS looks for basic information from your tax return. When your statement doesn’t match other records, you have a problem. When it doesn’t make sense in itself, you also have problems. Here are some of the basic mistakes to watch out for.
1. Check your math: did you take one? Are you sure the decimal is in the correct place? The biggest mistake found with tax returns has to do with math errors. If you drove 1,000 miles on business, how could your tax deduction be $4,450? You made a mistake somewhere. It must be $445. As painful as it may sound, you should sleep on a finished tax return and double check it the next morning to make sure all the numbers are accurate.
2. Married Filing Jointly – If you file under this status, you are effectively combining two tax returns into one. The IRS, of course, doesn’t know this unless you tell them. Be sure to enter your social security number AND your spouse’s number.
3. W-2 and 1099-MISC: If you are a salaried employee, your employer should have issued you a W-2 form. Be sure to attach it to your tax return when you submit it. If you received 1099-MISC forms as an independent contractor, DO NOT attach the forms to your tax return. The person who issued you the forms has already sent them to the IRS.
Finally, a little practical advice. You are expected to report your exact income and there is no exception to this rule. Many independent contractors run afoul of the IRS in this regard. When they don’t receive a 1099-MISC from a client they provided services for, they assume they don’t have to include the income on their tax return. Mmm no. You must report all income regardless of what other people have or have not filed with the IRS.