Tax filing can be a complicated process, leaving plenty of scope for mistakes to be made. Even the smallest error can end up costing big, from paying too much to being hit with an unexpected bill.
There can even be financial penalties for underpaid taxes, if the underpayment is caused by negligence, disregarding the rules or major miscalculations.
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Avoiding these errors starts with understanding where the mistakes happen and taking the necessary steps to get things right.
Here’s a look at the most frequent tax return errors, according to the IRS, and how to steer clear of them when it’s time to file.
Filing Too Early
Filing too late results in penalties, but, while rushing to file a tax return might seem like a proactive move, it’s not always for the best. Filing without all the necessary tax reporting documents can lead to delays in processing or calculation errors.
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Missing and/or Misspelling Information
Names and Social Security numbers on tax returns have to be an exact match for official records. Just one wrong digit of a Social Security number or a typo in a name can delay processing, so it’s important to carefully check every detail against official documents before submitting.
Not Checking Tax Withholding
Employees should check the income tax their employer is withholding every year, particularly if there have been any big life changes that could have an impact on taxes, like getting married, having kids or starting a side gig.
The IRS Tax Withholding Estimator can help make sure the numbers are adding up.
Selecting the Wrong Filing Status
Whether single, married filing jointly or head of household, choosing the wrong filing status has a direct impact on tax rates and deductions. The IRS offers an Interactive Tax Assistant to help in identifying the right status, among other things.
Getting the Numbers Wrong
What might seem like a simple math error can cause larger issues at tax time, like incorrect refund amounts, underpayment notices or penalties. Checking and double-checking calculations, whether done manually or electronically, is vital.
Misunderstanding Credits and Deductions
Credits and deductions can make a big difference to final tax figures, but eligibility criteria varies and isn’t always easy to understand. Taxpayers could easily miss out on something they’re entitled to, or alternatively claim something incorrectly and have to pay it back.
Providing Incorrect Bank Details
When a refund is due, the last thing the recipient needs is a direct deposit error, but giving the wrong bank account or routing number can lead to refunds being sent to the wrong place, often taking months to resolve.
Whether it’s a simple mistype or using old bank details in error, this is another reason why double-checking forms is so important.
Not Signing the Forms
An unsigned tax return is considered incomplete and won’t be processed until the signature is provided. If a refund is due, funds will likely be delayed, and taxpayers could even be hit with a penalty for late filing.
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This article originally appeared on GOBankingRates.com: 8 Tax Filing Errors That Cost Americans Thousands
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