Ever make a mistake on your tax return? If so, you’re not alone. Mistakes can cost you money – taxpayers often miss deductions or tax credits.
They can also draw unwanted attention to your return from the Internal Revenue Service (IRS) and could result in penalty fees. The National Society of Accountants (NSA) identified these “Top 10 Mistakes” that taxpayers make:
1. Using the wrong column in the tax table.
2. For each level of income, tax rates listed in the tax table usually are different for taxpayers who are single, married filing jointly, married filing separately, and heads of households. It can be easy to pull a number from the wrong column.
3. Not claiming the right number of exemptions. Children count as exemptions up to age 23 – make sure they are claimed on the return as exemptions with the current exemption amount, which often increases year to year.
4. Not adding state income tax refunds as taxable income. It’s easy to forget the state tax return refund you got last year. Remember that this counts as taxable income on your federal return if you itemized last year.
5. Not being aware of tax credits. The federal government offers many tax credits, including earned income, energy, education, fuel, elderly, child care, child tax, and foreign tax credits. Many states offer renters’ credits. Take advantage of these if they apply to you.
6. Not calculating and comparing the Alternative Minimum Tax. Every taxpayer must calculate this alternative tax to see if it applies to their situation. Failure to do so could result in additional taxes and penalties.
7. Not claiming a refund of excess FICA (Social Security) tax. If you changed employers in 2006 and earned more than $94,200 (the 2006 income limit that applies to FICA tax) the employers together may have withheld more FICA than you owe. Make sure you calculate this and claim a refund if appropriate.
8. Not attaching W-2 forms and other forms. This common mistake is easy to make, so double check to make sure they are included.
9. Not entering Social Security numbers on all tax documents. In addition to the main return, documents such as Schedule A and other tax schedules should all have complete information, including Social Security numbers.
10. Not signing the return. After all the calculations, don’t forget this important step!
11. Not enclosing the check for any payment owed. Yes, you must write a check if you owe money. Don’t forget to include it!