1-800-Charity Cars understands the importance of stretching your dollars and saving on your income tax return. Even with the growing popularity of tax preparation software, common tax mistakes can still occur due to errors made while manually entering information. This can cause a larger amount owed on your taxes, a smaller refund or delays in the processing of your tax return.
We would like to share some of the most common tax mistakes to help you avoid any delays in the correct processing of your tax return. You want your tax returns to work for you and not against you!
Failure to meet the tax deadline
Many people wait until the last minute to file their income taxes for various reasons, the most popular one is that they owe taxes to the IRS. If you wait and fail to meet the deadline, you may be penalized and will either owe more money or get less of a tax refund. Check out our article for last minute filers here!
Entering incorrect information
Simple errors are some of the most preventable common tax mistakes such as entering your Social Security Number incorrectly, misspelling names or any other information can cause your return to be rejected or delayed. This could be quite costly, since you might be charged penalties and interest, whether you owe taxes or not. Make sure that you go over your return and verify that all of your information is correct before filing.
Although tax preparation software does the math automatically, you still have to enter all of the numerical values. Make sure that you are entering values correctly and if you are manually preparing your taxes yourself, use a calculator to verify your figures. Also, review all of your itemized figures, such as a car donation tax deduction, to see if the amounts are written and added correctly. The written and mathematical errors could result in a higher amount owed on your taxes and delays in the processing of your tax return.
Not staying up to date on income tax changes
Be sure to visit the IRS website, at IRS.gov, and educate yourself on all of the new tax law changes and updates, since this can help you save time and money on your tax return and avoid common tax mistakes. Making sure that you are aware of any changes, expiration of certain tax credits/deductions and updates can benefit you, since your taxes will be filed appropriately according to the new IRS laws.
Failing to retain a copy of your income tax return
It is imperative that you keep a copy of your income tax return, in the event you need to amend it for whatever reason in the future or if you were ever audited. According to the IRS, you should keep your tax returns 3 to 6 years. You can also use the returns to track your tax filing trends and make it easier to file next year’s tax return.
Using the wrong forms
Always verify with the IRS what forms you should be using to file your income tax return specific to your filing needs and situations. With a quick visit to the IRS website, you can easily find what forms are available and what they are used for. For example, Form 1040 is a longer form to file, but offers a lot for your tax filing needs; since you can itemize deductions, enter self-employment income and many other things. Using the correct forms specific to your circumstances will help you receive all of the tax deductions and tax credits you qualify for.
Many tax filers make errors or lose out on tax deductions because of disorganization. Gathering a year’s worth of information can be stressful, time consuming and may cost you in the long run. Stay organized throughout the year. Designate one filing cabinet drawer, a box or a file folder to store all your income tax receipts, documentation, and other required paperwork, so that when it is tax season, you will have all of your information readily accessible and in one location.
Carrying over old numbers from the previous year’s tax return
With all the changes that the IRS makes each year, never take numbers from your previous years return and just roll them over to your new return. Be sure to verify the numbers for your deductions, exemptions, tax rates, income limits and etc. are in conjunction with the current year that you are filing for. Mistakes like this could cause you to owe or lose money as well as delay your tax returns.
Not filing a return for the year
With some people owing on their income taxes, they tend not to file a return at all. People who are due a refund also fail to file. Regardless of whether you owe or are entitled to a refund, always file your income tax return each year by the deadline. The penalties and interest that you will incur will either raise your tax bill or take away from your refund. If you do have a tax liability and cannot afford to pay it, the IRS does have installment agreements that you can apply for and pay a small amount each month.
Forgetting about charitable giving
If you make charitable contributions throughout the year, then keep track of your giving. While many people give from the kindness of their hearts with no concern of tax deductions, if you are a charitable giver you should take advantage of the tax deductions for your generosity. Refer to IRS Publication 526 for charitable giving or IRS Publication 4303 for guidelines about vehicle donations, to ensure you have what you need for those tax deductions.
We hope these tips help you to avoid the most common tax mistakes this year. If you have not started your charitable giving for 2013, there is still plenty of time to get a 2013 tax deduction before the end of the year. You can start now and help change the lives of struggling families by making a monetary donation or car donation to 1-800-Charity Cars. We accept all types of vehicles throughout the US and you will receive a full “fair market value” end of year vehicle donation tax-deduction, if we provide your vehicle to a deserving family. Fill out our quick online car donation form or utilize our online donation services using JustGive or PayPal at www.800charitycars.org or call 1-800-242-7489 and make a donation today!