Taxes - How to Avoid Mistakes in Filing

Every year, the IRS (Acronym: Internal Revenue Service) witnesses American citizens committing the usual same mistakes on their income tax returns. While tending to some of these errors may prove a bit more complicated to avoid, many others are not.

Your income-tax return can prove to be a pain-in-the-brain when you find out that unnecessary mistakes have been made. The simplest of errors can rob you of time, can cause you stress and aggravation, and most importantly, your money. Therefore, it's essential that your tax-return receive careful attention.

According to the IRS, some of the most common taxpaper mistakes are generally listed below.

Wrong status filing claims

Many citizens don't seem to understand that they just can't choose to file single or married. The marital status is determined by Dec. 31st of each year. Whatever is prior to that date makes no difference for tax purposes. You separately file either married filing or jointly, and even if you qualify for being the "head of household", you still have to satisfy all the requirements. If you consider yourself just the head of your household, you won't qualify.

The wrong status claim could severely affect your eligibility for the exemptions for dependents, the earned-income credit and the child tax credit. Take the time to check out the instructions or information which Form 1040 offers, for more details which will help you to select the status filing which is correct.

Using wrong or forgetting to include Social Security numbers

The IRS computers will reject your credits and deductions if the Social Security numbers (for your dependents, the earned-income credit and child tax credit) do not match your dependents' Social Security cards.

For those of you still filing your returns by hand, take the time to make sure that your hand-writing is understandable to read and legible on your tax returns.

Avoid the mistake of using incorrect schedules and forms

The IRS is a vast systematic bureaucracy that relies on a computer system to keep the conveyor belt going for processing your income-tax files. This computer system is totally un-biased, and has no feelings. You don't want to mess around with the system's directives where auditing is concerned.

For example, if you file your employee business expenses on "Schedule A" without attaching Form 2106, this emotionally-retarded computer system is going to "click". And the more the computer clicks, you're setting yourself up to be a candidate to get audited. By correctly filing all the forms appropriately, you'll be "computer system-friendly", while simultaneously avoiding the possibility of being audited.

The failure to sign and date your return

This is a simple one. If you forget to sign the return, it will be considered as if you never filed. A joint return must be filed by both spouses. And naturally, if your return is not considered as "filed", then there will be a variety of penalties that you're going to subjugate yourself to. Not forgetting to mention the interest on any amounts which you've not paid in full.

Be alert. Sign and date your returns, unless you want the IRS to come knocking on your door.
Avoid being scrutinized by governmental officials thinking that perjury was your intent.

Not reporting domestic workers

Whether you like it or not, taxes on your payments to your lawn gardener, house cleaner, etc., still have to be declared. Unfortunately, it's the law.

According to the IRS guidelines, if you pay $1,500 or more in your fiscal year 2007 to any of your household employee(s), you must file Schedule H in order to report the liability if you're going to with-hold, and match, both the Social Security (6.2%) and Medicare (1.45%) taxes.

For more information, refer to Publication 926 for details.

Conclusion

Over-all, the time you invest to make your tax returns more clear will not only make it easier for the IRS to file your returns correctly but will save you a lot of headaches in the future.

Source:
IRS - Internal Revenue Service