The Most Common Tax Filing Mistakes
Taxes are one of two things that are certain in life, as the saying goes, but plenty of people are still uncertain about how they should file. Use a tax pro or accountant? What about one of those services like H&R Block? Or the tax software?
Robert Arnold, a CFP with Cornick, Garber & Sandler LLP, strongly recommends that people work with a qualified accountant on their taxes as accountants are almost always the people who can get you the most deductions and fewest audits. He says he speaks with his clients all year round so that by the time tax season comes around, he is familiar with their lives and overall financial situation enough to save them money in ways they cannot think of.
Working with a tax profession is especially crucial, Arnold says, if you are an independent contractor, hedge fund investor, trade in the markets frequently or have children in college, as these often lead to the most complex tax returns.
Without the guidance of a CPA, people make all sorts of mistakes on their tax filings. The most common, according to Arnold, is to just leave reported income off the return entirely, either by forgetting or doing the math wrong. There’s also filing status errors and not understanding the alternative minimum tax. The latter is calculated at the same time as your regular taxes; whichever tax amount is greater is the one you have to pay. If the alternative method results in a higher tax, the difference between it and your standard tax bill is the AMT.
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