It’s no big secret that most people dread having to file their taxes. The feeling is even worse for you all who are filing for the very first time - fear of making a mistake that will have the IRS all up in your personal finances, and heavy penalty fees.
While in some cases, a mistake on a tax return may lead to an audit, the most troubled beginners would have to worry about a letter from the IRS stating the error to fix, or a delayed return - which is still a pretty big deal because it’s your money.
“Knowing is half the battle,” and if you’re aware of the most common filing mistakes, you’ll know how to avoid them, and best of all, get your tax refund as quickly as possible. Here are the top filing mistakes made by beginners.
1. Filing a Paper Return
You’ve done your research - you know you can get a filing form at IRS.gov, or your local library. You know where all the tax preparing kiosks are throughout your town. But consider electronic filing (e-filing) as your main choice. For adjusted gross incomes under $62,000, you can e-file for free through the IRS, or use other tax prep software. With direct deposit, e-filing is the quickest way to get your tax refund.
2. Claiming an Exemption
Exemptions can lower your taxable income - a little Tax 101. And you claim one for yourself and any dependents you may have; however, if you are a dependent yourself - meaning your parents still claim you on their taxes - you’re heading into a tax nightmare. Your folks could lose a dependent exemption along with any education tax credits if you happen to be in college.
3. Using an Incorrect Social Security Number
Be sure to double check social security numbers for yourself and any dependents you’re claiming. An incorrect SSN# can delay the processing of your tax return, and in some cases, even reject exemptions for dependents.
4. Not Including all Sources of Income
Often, first-time filers don’t include every source of income - especially if it’s independent contract work. They tend to round numbers in an attempt have clean figures, and to speed up the filing process. However, with contract work, a 1099 is sent to the recipient, and the IRS. It’s a simple matter for the IRS to realize that a filer’s amounts don’t match what the employer reported.
5. Filing with the Wrong Status
According to the IRS, many people file their taxes using the wrong status - meaning they file as “head of household” rather than “single.” You definitely want to file with your correct status because it determines your taxes owed, claimed deductions, and qualified tax breaks. E-filing can help select the right status.
6. Filing at the Last Minute
The #1 cause of filing errors is mostly likely due to waiting until the last minute to file - you’re rushing, not double-checking, and doing whatever it takes just to make the deadline. If you file late, you could be facing up to 25% of your unpaid tax in penalties.
7. Refusing Low Taxable Income
You might not even be aware that you’re turning away low taxable income - that is, income that is taxed. The lower the taxable income, the less you’re paying to the IRS - a little Tax 102. The main way to lower taxable income is through itemized deductions. Even if you use the standard deduction option, there are still plenty other deductions you can claim only through itemizing.
8. Calculating the Wrong Math
For those of us who can say math isn’t particularly our strong point, incorrect calculations here could lead to paying less than what you owe, which in turn, will force the IRS to bill you the rest with interest. Again, e-filing is your friend - it’ll automatically do the math for you.
9. Neglecting to Sign Form
The biggest facepalm of all time possibly - no matter how perfect or accurate your tax form is, it means absolutely nothing if your signature isn’t on it. If you have a spouse, both of your signatures are required. With e-filing, you’re prompted to enter a personal identification number (PIN) that the IRS assigns you for easy e-signing.
10. Refusing Tax Credits
Even better than tax deductions are tax credits because they reduce your tax liability - such credits include the Child Tax Credit, Earned Income Tax Credit, and Retirement Saving Contributions. E-filing can help decide which credits you qualify for.
11. Expecting a Huge Refund
You might be wondering, “How is this a mistake? The point is to maximize your refund, right?” Well, yes and no - you do want to get back your maximum amount, but getting an enormous refund also means that the IRS took too much money from you throughout the year. Check back on the withholdings you claim on your W-4 with your employer - you may need to file a new one to have less tax withheld, and claim more allowances.
12. Forgetting to File
Nevermind forgetting to sign, this has to be the biggest facepalm of all - just flat-out forgetting to file. The IRS reports $1 billion in unclaimed refunds every year - usually from people who forget to file, and those who think they make too little to file. No matter what, if taxes are taken from any compensation you’ve received, you need to file. And for us chronic “forgetters,” we’ll remember after paying fees for each month we’re late.
To be a tax refund baller, you obviously need to have your information all together. For more time figuring out all your sources of income, eligible credits, or tax deductions, don’t sweat - e-file Form 4868 with ExpressExtension to instantly receive an extra six months to file your 1040. You don’t even need to be near a computer - download our FREE Express 4868 App for iOS and Android devices, and have your extension approved in minutes.
Our live, e-filing professionals in Rock Hill, South Carolina are available for any comments or questions you might have. Give us a call at (803) 514-5155, Monday through Friday from 9 a.m. to 6 p.m. EST, or email us at firstname.lastname@example.org. Let us know any memorable moments you’ve had filing for the first time in the comments below.