Tax season is here! In fact, we’re already halfway to the deadline! You’ll want to make sure your finances are in order so that you can properly report your income and expenses to the IRS. Unfortunately, a lot of households make the same mistakes and they’re avoidable!
Simple mistakes can lead to a tax audit. That means the IRS will double check that your individual account and tax information is correct. To avoid the headache of a tax audit, be sure to report your income and expenses properly the first time. Start by avoiding some of these common tax mistakes:
- Filing late or forgetting to file. If you are required to file an income tax return, be sure to file it on time to avoid a penalty for filing late. If you are missing important tax information when your return is due, file for an extension. Alternatively, you can also file a return with the best information you have and amend it later, if necessary. Even if you have tax due that you cannot pay immediately – file your return. The IRS imposes separate penalties for filing late and for paying late, so it’s better to at least get the return in on time.
- Inflating the value of charitable contributions. Making noncash contributions to a charity can be a smart move. My husband and I enjoy partaking in the St. Jude’s Dream Home sweepstakes every year and making contributions to other not-for-profits that we are involved in. This helps the organizations, plus you generally can claim a deduction for the value of your donation. It’s a win-win!
- Not contributing to a retirement plan. It’s not too late to contribute to some retirement plans. You generally have until April 15, 2019, to make contributions of up to $5,500 to an IRA (or combination of traditional and Roth IRAs) for the 2018 tax year. If you were age 50 or older by the end of 2018, you can contribute up to a total of $6,500 to your IRAs. If you’re younger than 50, the maximum contribution limit is $5,500.
- Direct deposit account number errors. Triple check your financial institution account number for where you want the IRS to send your refund. Otherwise, someone else could get your tax refund, or it could be sent back to the IRS and that’s a whole other process you don’t want to have to deal with.
- Not using your 2018 tax return to help plan for 2019. 2018 was the first year we all saw the effects of most aspects of the new tax laws. That means it’s more important than ever to see how your tax situation turned out this tax season and plan your best 2019 tax year possible.
There are many other simple tax filing mistakes, but these are five that can really benefit you. Try to take advantage of any remaining tax-saving opportunities, don’t wait until the last minute, and choose the right software or company to prepare your taxes.
If you haven’t already filed your tax return yet, don’t worry. 1st Financial is working with TurboTax to offer our members up to $15 in savings when you file through the link on our website. Your discount will automatically be applied during the checkout process when you file your tax return with TurboTax.