Frequent Tax Mistakes

Most tax mistakes happen because attention is not made to details. If the individual tax payer reads all of the instructions found in the Publication 1040S and all of those necessary and required forms and schedules; then they should have no problems. However, you can have several errors that may delay and complicate your tax return and any possible refunds. These are enumerated below:

1) Choosing the wrong filing status. If you fail to understand and file the incorrect status you will delay the processing of your return. For example. You can file under the single status if you were never married, divorced or legally separated under a separate maintenance agreement or if you were widowed before January 1, 2006 and did not remarry before the end of 2006. You can claim married filing jointly if you were married at the end of 2006, if your spouse died in 2006 and you did not remarry in 2006 or if you were married at the end of 2006 and your spouse died in 2007 before filing your 2006 return. Married Filing Jointly will mean that you will pay more federal income taxes and you will be responsible for paying your own income, claiming your own deductions and credits. Head of Household can be claimed only if you are responsible for paying over half of the household expenses and half of the house rent or mortgage.

2) Failing to include or use the correct Social Security Numbers. It is your responsibility to accurately list the correct Social Security Numbers for yourself, spouse, qualifying children and dependents on your tax return.

3) Failing to use the correct forms and schedules. You must review all the necessary forms and schedules needed for your return as stated in Publication 1040.

4) Failure to sign and date the return. If your tax return is not signed the IRS will not accept nor process it. It is considered incomplete because the signature with date attest that the return is accurate under penalty of law.

5) Claiming ineligible dependents. Only claim those that meet the legal definition of a dependent as stipulated on page 19 of Publication 1040S.

6) Failing to file for the Earned Income Credit. More accurately put one must file or not file by filling out the tax return accurately for this portion.

7) Improperly claiming the Earned Income Credit. Carefully review the eligibility requirements for filing EIC found in Publication 1040.

8) Failing to pay and report domestic payroll taxes. If you hire a house cleaner, in-home caregiver or nanny, you must pay and report income taxes for them.

9) Failing to report income because it was not included on a Form W-2 or Form 1099 or other information return. Remember you are responsible for filing to the Federal Government on time and accurately all monies and income earned by you during the tax year.

10) Treating employees as independent contractors. Read Publication 15-A, Employers Supplemental Tax Guide. Many employers make the mistake of categorizing employees as independent contractors wrongfully. This can cause unavoidable delay and possible fines for the employer.

11) Failing to file a return when due a tax return. One must file a return if one is to receive a refund.

12) Failing to check liability for the alternative minimum tax. The IRS may deny or reduce a refund if the taxpayer is liable for the AMT. The IRS may even increase the amount of tax due.