It’s that time of year again! Break out the calculator and pencils; dig out your pile of receipts, tax forms and paystubs; and get to work. Drowning in paper and getting numb from all those numbers? Take heart! As soon as it's all organized and filed, you don’t need to think about your taxes again until next year.
Don’t be too hasty, though. You don’t want to wind up making a mistake that’ll delay your refund or make you accountable for a fee. Or, even worse, force you to do that dreaded paperwork and math all over again!
Whether you use an online tax program or hand it over to an accountant, be careful when filing your taxes. Check out our handy list of common mistakes people make on their taxes so you can avoid them.
1.) Faulty math
Believe it or not, one of the most common errors on filed taxes is simple math mistakes. A small miscalculation can throw off all your numbers and get you into trouble with the IRS. Using an online program or a number-loving accountant may mitigate this problem, but it won’t assure you of anything. However you choose to prepare your taxes, be sure to triple-check all the math before filing.
2.) Name changes and misspellings
When preparing your taxes, you’re thinking numbers. It’s true that most of the information you’re submitting is in numerical form. However, don’t forget to pay attention to everything else on your form! Details matter. If your name doesn't match the one on file for your Social Security number, your refund may be delayed. Or, your tax return may not be processed at all. Similarly, if you spell your name wrong, it won’t match the one the IRS has in its system. This could mean trouble for you and your taxes.
If you’ve recently changed your legal name because of a marriage or divorce, let the Social Security Administration know. Otherwise, remember to use the correct spelling of your legal name on all your tax forms. Review every form carefully before filing to avoid frustration later.
3.) Omitting extra income
Detailing your earnings from your day job is a given when preparing your taxes. Most of us even remember to include bonuses and extra commission earnings. But many people neglect to include other sources of income, such as freelance work and other side jobs. If you’ve taken any side jobs, be sure to fill out a 1099-MISC and file it along with your taxes.
4.) Deducting funds donated to charity
Everyone knows you can write off charitable donations as a deduction, but many people aren’t sure how to do it. Charity laws are complicated! First, only donations given to an organization with a tax-exempt status can be deducted from your taxes. Second, if you’ve donated food items or used clothing, they had to be in decent shape to be write-off eligible. Finally, calculate the value of your non-monetary donations according to what they would be worth if you’d sell them now. Don’t forget to include those charity tax receipts when you file!
5.) Using the most recent tax laws
When preparing your taxes, be sure to file according to the most recent tax laws. Below are adjustments that were made for tax year 2021 pertaining to returns that are filed this tax season:
- The standard deduction increased to $12,550 for single, $18,800 for head of household, and $25,100 for married filing jointly.
- The maximum earned income tax credit increased to $6,728.
- The maximum income limit for the EITC increased to $57,414.
- The foreign earned income deduction increased to $108,700.
- Annual deductible amounts for Health Savings Accounts increased for individuals only, to $3,600.