Each year the Internal Revenue Service (IRS) makes various changes to the Tax Code. While the IRS makes some of these changes to simplify the filing process or the tax laws, even these changes in the end often leave the average taxpayer feeling more and more overwhelmed.
Given the length of the Tax Code, it is no wonder that every year taxpayers file literally tens of thousands of erroneous federal income tax returns. And many errors on these returns are to the detriment of the taxpayer, as they owe more money than they in fact should.
So what can you do? Read on to hear about some of the most common errors made in preparing federal income tax. In the end it may help you avoid these mistakes.
For more information about federal income taxes, please visit our web site’s “Tax Relief” page.
Filing Your Tax Return on Time
Many people who need to file a federal income tax return either do not file the return on time or do not file the return at all. The IRS charges a penalty of 5 percent per month on any unpaid balance when you fail to file your tax return. In addition, the IRS assesses interest at the annual rate of 3 percent plus the current interest rate.
Between the interest and penalty assessed by the IRS, filing your tax return late or not at all can result in your owing significantly more money that you otherwise would. Therefore, take the simple step of preparing and filing your tax return.
Using the Incorrect Filing Status
The filing status you choose on your tax return—single, married filing jointly, married filing separately, or head of household—directly affects the standard deduction you receive.
Choosing the incorrect filing status may mean you receive a smaller standard deduction than you deserve. Or you may choose a filing status that you do not qualify for, which means you may have to re-file your tax return, possibly owing a penalty and interest if you did not pay enough tax originally.
Therefore, take time to determine your filing status. And remember that if you get married, divorced, or go through other life changes during the tax year, you should use your filing status as of December 31.
Missing Tax Deductions and Credits
The Tax Code outlines a number of tax deductions and tax credits that are designed to reduce the tax someone owes. Whereas a tax deduction reduces your taxable income, tax credits are even better as they directly reduce the actual tax owed.
Tax deductions include common items such as mortgage interest, charitable contributions, and medical expenses. Tax credits include the Child Tax Credit.
It is often wise to work with a tax professional to get help preparing your tax return to make sure you do not miss out on any tax deductions or tax credits you deserve.
Help Filing Your Tax Return
If you need help preparing and filing your tax return, you can call the phone number at the top of this page and a tax attorney will call you back. The tax attorney will be a professional, someone in the business of knowing the Tax Code and helping people file their taxes correctly.
The initial conversation is free of charge and does not obligate you to anything further. So you have every reason to make the call today and get the help you need to file your return correctly and on time.
Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.