As tax season comes around, many individuals are struggling to find the money for an accountant to prepare their taxes. This is not because they have too little income, but rather because they have failed to take advantage of what could be significant tax deductions. The accountants who want your business will be happy to help you figure out where you stand and report incorrect information on your part.
Whether it’s carelessness or just being overwhelmed with the complexities of the system, it often seems that people are doing nothing more than handing over wads of cash in hopes that someone else understands the system better than they do.
While this may seem like a complex issue where there’s no way to avoid mistakes altogether, this is far from true! Here are some of the biggest mistakes people often make when filing their taxes.
1. Claiming the wrong filing status – One of the most common errors that is made when preparing taxes happens when someone fails to report their correct filing status. The difference between single and married can have a huge impact on your final tax return, so if you’re considering marriage or divorce in 2014, it’s important to adjust your tax filings accordingly.
2. Failing to claim dependents – You may not have children of your own, but do you support others financially? If so, this makes them your dependent, giving you a significant boost in many areas of your life! Make sure not to miss out on being able to write off medical expenses, tuition, and much more just because you forgot to mention your dependents.
3. Not being aware of the earned income credit – The earned income credit is a way for low-income families to lower their tax bill through refunds! This means that if your earnings are low, you may qualify for this type of refund, so be sure to check it out before filing, as it will make a big difference in the outcome of your return.
4. Taking deductions on things like cars and clothing – While these expenses may be significant to you, they generally won’t count as deductions when filing with an accountant. If you want them included, make sure to prove that they were necessary business expenditures.
5. Skipping over deductions – Other expenses that can be included on your tax return include donations, childcare, medical bills, medical mileage, student loan interest payments, retirement account contributions, moving expenses for work or school, business use of home. The list goes on! Be sure to take advantage of all possible deductions you’re eligible for.
6. Not including Form 1099-MISC – Everyone needs to file their taxes professionally at some point in their life simply because there are so many complicated rules and regulations governing the process. Most people don’t realize the extent of these rules until they’ve already made a mistake!
One way to avoid this is by always including copies of all necessary documentation with your tax return. includes any 1099s that may apply to your situation.
7. Not keeping good records – Along the same lines, it’s vital that any paperwork you’re given is kept for years after filing. If you do not keep all documentation, you cannot prove what deductions apply to your situation and how much money you are actually owed back in tax returns.
This makes it more likely for your return to be audited by the IRS! Keep this in mind when receiving documents like bank statements, brokerage statements (including retirement accounts), medical bills/receipts, mileage logs for business or medical use, donation receipts… The list goes on!
8. Failing to check the status of your refund – Once someone files their taxes with an accountant, they expect to get their refund back within a certain amount of time. In most cases, this is true, but it’s important to check on your return throughout the filing season so you know there aren’t any problems.
While these are some of the biggest tax accountant mistakes people make, remember that this doesn’t have to be you! Make sure to keep all records and receipts necessary for filing your taxes in 2014 – it’s a great way to avoid errors and ensure that everything goes smoothly when preparing your returns.