Filing tax returns is one of the most important financial tasks of the year, and if you are distracted during the filing process, you could make mistakes. Any lapse in the filing process can make you miss out on larger refund claims and make you pay additional tax. Further, errors in the paperwork can result in added interest, penalties, and audits from the Internal Revenue Service. So here are tax filing mistakes to avoid:
The most common tax filing mistake to avoid is missing the return filing deadline. This can mean a 5% penalty on the amount due for each month or each partial month the return is delayed. The maximum penalty is capped at 25% of the total due amount. If you are about to miss the deadline, you can request an extension by filing Form 4868 before the tax-filing deadline, and you will receive more time to complete the paperwork.
Incorrect Social Security Number
Social Security Numbers are used by the IRS to cross-reference information collected from an employee against that received from the employer, bank, and other establishments. So accidentally typing an incorrect SSN can disrupt the process and result in a rejection of returns. Ensure that every digit is exactly as printed on the Social Security card.
Not signing your return
An unsigned return is considered invalid by the IRS so ensure that you send them a signed copy. If it is a joint filing, then your spouse will also need to sign the document. Further, if you have hired an agent to prepare the tax return, they must sign and provide their IRS Preparer Tax Identification Number.
Spelling your name wrong
Misspelling one’s name is a common mistake many individuals make as people do not generally use their full legal name regularly. So fill in your name just as it appears on the Social Security cards. You can also update the Social Security Administration if you have changed your name. This will help avoid any red flags from your bank or the IRS when printing your name on the check.
Getting the bank account number wrong
Several individuals prefer the direct deposit option when filing for tax as this method gets them a refund quicker. However, an incorrect account number might lead to the IRS routing the money to an invalid account. While the bank will generally reroute the amount, the error will delay the process.