5 Easy-to-Miss Tax Filing Mistakes
February 20, 2012Whoops! In preparing for this blog, I realized that I made one of the easy-to-miss tax filing mistakes I was going to alert you to! I moved last year and was supposed to inform the IRS by filing form 8822. If they sent paperwork during the year, I can’t just say, “I never got it – I moved!” That is a bit like saying, “My dog ate my homework” and will just not fly with the IRS. I sure hope any statements were forwarded by my old post office. Shoot.
So with that — the first mistake to avoid is:
Not letting the IRS know you moved.
Some other common mistakes are:
Not using tax software. Really? A pencil and paper? Tax preparation software is very inexpensive, especially if you don’t have a complex return. If you don’t use a tax professional to prepare your taxes, consider using a tax prep software program even if only for the checklist of deductions at the end. You may easily get your $35 bucks back.
Have help? Pay the payroll taxes! Politicians and the rich and famous are often (embarrassingly) cited in the news for not paying payroll taxes for their in-home help. Household help is not just for the rich and famous. If you have a nanny, an au pair, or a in-home care taker for a loved one and pay them more than $1700 in a calendar year (for 2011), you are required to pay Social Security taxes on their earned income.
Forgetting to claim your state income taxes. On Schedule A, you can deduct the state income taxes you paid on your federal return. This is an easy one to overlook.
Paying taxes owed by credit card. You can pay your tax bill by credit card and at first glance this seems like a great idea. The problem is there are hidden fees on a credit card – ones that a merchant usually pays. Notice they always ask, “Credit or debit?” when you are making a transaction? Well with the IRS, there is no merchant to pay the fee. You have to pay it and the fee is 2.5%. Better to find another way to pay your taxes due!
The IRS has a few others to add that maybe aren’t so easy to miss – just people moving too fast. Some of the common errors they cite in Tax Topic 303:
Print your name directly on your return. (Hmm… I think I got that one).
Enter the names (yours and your dependents) exactly as they appear on their Social Security cards. (Good advice.)
Check only one filing status. (I could see that happening by moving too fast).
Sign it. (Kind of important.)
Oh and don’t forget to let them know where you live! (Note to self.)