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Tax season is here, and Americans can now file their 2022 taxes with the IRS. If you're looking forward to a tax refund this year, filing an accurate, error-free return is the best action you can take to receive that refund as soon as possible.
According to the most recent data from the IRS, about 12 million of the returns filed for the 2020 tax year had a math error. Depending on the mistake, an incorrect return could cause you to pay more than you actually owe in taxes or saddle you with penalties and interest fees
While you can fix many mistakes on your tax return after filing, it's far better (and more convenient) to get it right the first time around. "You don't want to amend your return unless you have to," says Luis Rivero Vazquez, a CPA and Director of Tax at Taxfyle.
Watch out for these six common mistakes that trip up millions of taxpayers to make sure nothing stands in the way of your return.
If you haven't received all the tax documents you need yet (or aren't sure what you even need), you're not ready to file your taxes.
"The most common mistake that you'll see is that a taxpayer will go to an accountant or go to do their taxes through a self-preparing mechanism and they'll do it without everything they need," says Vazquez.
Collect all of the documents you need for the income you earned through work, such as W-2s from all the employers you had during the tax year and any 1099 forms from earnings like freelance income. Depending on your financial activity, you'll also need forms for investments, health savings accounts, and retirement income.
The IRS has helpfully compiled a list of tax documents and under what circumstances they're required for filing. Make sure you check it before sending in your return.
"What might happen is that [a taxpayer will] say 'oh, hey, I'm getting this huge refund, but I forgot my crypto, or I forgot the small investment that I sold that I need to pay taxes on.'" Not having all the information you need could mean that you're over or underpaying your taxes.
If you claim any tax credits or deductions on your return, bust out the calculator and make sure your math adds up. Otherwise, you're setting yourself up for a potentially expensive surprise bill from the IRS.
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While tax software helps stop math mistakes from creeping into your return, it still depends on you to enter data that's correct. For example, if you tell the software you have 4 dependents when you actually have none, the program doesn't have any way to know that's incorrect.
You can't be too careful when checking the numbers throughout your tax return.
Vazquez recommends paying close attention to your adjusted gross income, any charitable contributions or medical expenses (if you itemize your deductions), and the amount of tax you've already paid through withholding or estimated tax payments.
Whether you've done your taxes yourself, or had a certified public accountant (CPA) or enrolled agent (EA) do your taxes for you, make sure to look over the full return.
"You shouldn't just sign it," Vazquez says. "As a person, I'd want to know 'Did this agree to an extent with what I was expecting?' If it doesn't, can the CPA or the EA explain to me why was I wrong?"
Lastly, check that your name and Social Security number are accurate — they should match the name and number on your Social Security card. Lastly, double-check your bank account number and routing number if you want your refund direct deposited.
You have five options when it comes to choosing your filing status:
- Single, for anyone who is not legally married.
- Married filing jointly, for when you and your spouse want to file a joint tax return.
- Married filing separately, for when you and your spouse want to file individual returns
- Head of household, for when you're unmarried and paying more than half the cost of maintaining your home. In addition, you must have a qualifying person living in that home for at least half a year. Other rules may also apply to claim this status.
- Qualifying widow or widower with a dependent child, for when your spouse died during the previous two years (other rules also apply).
If your filing status is wrong, it could be costly. "You could end up paying a lot more tax if you're not choosing the right one," Vazquez says.
As you finish your taxes, the final step is to sign your return. The IRS reminds taxpayers that an unsigned tax return isn't valid.
If you're filing jointly, both spouses must sign the return. If you're filing as a single person, make sure you've signed your return before submitting it.
Don't completely wipe your return from your mind after you submit it. "Get a confirmation that your return got filed on time and that you have something that says your return with your Social Security number got accepted," Vazquez says.
Once you're certain the government has accepted your return, then you can congratulate yourself on successfully finishing your taxes for the year.
A correct tax return helps you receive your tax refund as soon as possible. Check the entire return for the common mistakes or inaccuracies described above, and don't be shy about relying on tax software (or a professional) if you want extra peace of mind about filing.