Most Common Tax Mistakes to avoid in 2022
Thousands of taxpayers receive their tax refunds late not because of the IRS’ own doing but because of the tax return filing errors made by taxpayers when they prepare their tax returns themselves. As the April 18 tax deadline approaches, taxpayers should avoid these common tax return filing errors on their returns to ensure they get their refunds accordingly and without delay. Here are the most common tax mistakes to avoid 2022 if you want to get your refund without delay:
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Filing by paper.
Even though filing your tax returns the old traditional way is not a mistake itself, electronic tax return filing is the fastest and easiest way to file taxes. It takes a fair amount of time for accountants to find the right form to fill out, complete the form, and then attach all necessary documents before submitting the return. Electronic filing saves you time by filling out all of these forms for you. It also cuts down on mistakes because when you use tax software it automatically applies the latest tax laws, checks for available credits or deductions, does the tax calculations for you and asks you for all required information. As a taxpayer, you should know that filing paper returns will take longer than usual this year because the IRS is working through a backlog of those forms related to COVID-19. Electronic filing is encouraged by the IRS.
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Not Reporting ALL Taxable Income.
Not declaring or reporting all of your taxable income is one of the most common tax mistakes this year. Make sure you have the documents needed to complete your federal and state tax returns before you begin. Examples of documents needed are Forms W-2, 1099-MISC, or 1099-NEC. If you underreport your income, you may be subject to penalties and interest. Wages, dividends, bank interest, and other income received that was reported on an information return should be entered carefully on your tax forms. This includes any information needed to calculate credits and deductions.
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Incorrect or Misspelled Names and Social Security Numbers.
The IRS wants you to list Social Security numbers exactly as printed on the card. If you claim someone as a dependent, you must enter his or her Social Security number. If the dependent or spouse doesn’t have an SSN, enter the Individual Tax Identification Number (ITIN). The same principle applies to names listed on a tax return; they should match the name on the Social Security card.
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Incorrect Filing Status.
The Interactive Tax Assistant on IRS.gov can help you choose the correct filing status, especially if more than one filing status applies to your situation. Filing software, including IRS Free File, also helps prevent mistakes with filing status.
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Incorrect Bank Accounts and Routing Numbers.
If you file a federal tax return, you can have your refund directly deposited into one, two, or even three accounts. Make sure that the financial institution routing and account numbers entered on the return are accurate. Incorrect numbers can cause a refund to be delayed or deposited into the wrong account.
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Not Answering the Virtual Currency Question.
This is probably the most common tax mistake to avoid in 2022, not reading through the form can cause you to skip this new question in Form 1040 which asks whether, at any time during that year, a person received, sold, sent, exchanged, or otherwise disposed of any financial interest in any virtual currency. All taxpayers must answer this question – not only those who engaged in a transaction involving virtual currency.
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Guessing Applicable Tax Credits and Deductions.
Taxpayers who make mistakes figuring credits or deductions can use the Interactive Tax Assistant Tool on IRS.gov to ensure they are getting all of the benefits to which they are entitled. Tax software will alert taxpayers if any required forms or schedules are missing from the return. Taxpayers should double-check where items appear on the final return before clicking Submit.
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Not Signing and Forgetting to Date the Tax Return.
This primarily might be the most common tax mistake in 2022. When you file a joint return, make sure that your spouse must sign and date it, as well. E-filers can use a self-selected personal identification number (PIN) to sign the return.
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Not Keeping a Copy of Your Tax Return.
If you’re planning to file your return electronically, be sure to make a copy of your signed return and all schedules for your records.
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Ignoring Tax Filing Extensions.
If you can’t meet the April 18 deadline this year, you can request an automatic filing extension to October 17, 2022. Remember that while an extension grants additional time to file, tax payments are still due April 18, 2022.
Bottom line
When preparing your taxes DIY Style, it is not uncommon to make mistakes. The realm of taxes is vast and complicated and even the most well-intentioned taxpayer that DIYs their tax preparation and filing can make mistakes. However, in the eyes of the IRS, mistakes are mistakes and this can trigger an audit that can cause a much larger headache for you. Don’t gamble with your tax return filing. Find the best tax preparer near you so you can have peace of mind that your taxes are prepared correctly!
