Five Mistakes to Avoid Trouble with the IRS

It is that time of the year again: income tax return is due by April 15^th. For some of us early birds, we are done with this dreadful chore, and either planned what to use the refund for, or how to pay back what we owed.

However, there are still many frantic people trying to gather receipts, paper work, and bills to file their return on time. When rushing to complete your income tax, keep these five important things in mind to avoid troubles with the IRS.

Nice and neat

If you hand-write your return, make sure to do it nice and neat. Check for math errors, social security numbers, and sign your return. Experts believe that these three areas are the most common problems.

If it is possible, have your partner goes over the return to check for mistakes. More importantly, file electronically to speed up the process, and avoid the chance of making a mistake.

Itemize and Standard Deduction

It is incorrect to think that you are audit-proof if you choose not to itemize. If your deductions add up more than the standard deduction, then itemize! Take time to total your deductions and see if you should itemize or take the standard deduction.

For 2007, the current standard deduction is $5,350 for single filers, $7,850 for head of household filers, and $10,700 for married couples who file a joint return.

Claiming Dependent

Be extremely careful in this area! Make sure the dependent you claim is a qualify child. Go through the work sheet attentively. If the IRS detects a mistake in this section, not only you will get a smaller refund or higher tax bill, you may also have to pay a penalty, depending on the taxes owed, and the reason for the mistake.

For divorce couple, only the parent who has physical custody for more than six months of the year can take the deduction.

Get a Receipt

When mailing out your return, make sure you ask for a receipt. The burden of proof is on you! If you send it certified, not only you will have proof, you also cannot be charge a late fees or interest.

Always keep a copy of the return for your records. The length of time is at least five years to safeguard these returns.

Do File Your Return

If you think you cannot pay, and fail to file, it can be very costly! You will be charged penalty, interest, and also the taxes you owe when the IRS catches up with you.

File your return, and arrange with the IRS for an install payment agreement. With this option, you can pay over a period of months with interest, and avoid many unnecessary troubles or headaches.

When you are filing the return yourself, plan on having plenty of time to do it carefully page by page. Gather all your information, follow all the rules, understand all the laws, and complete all the forms since there are more deductions and credits available. Make sure you use all the work-sheets that are available to avoid the chance of making mistakes.