Avoid Common Tax Mistakes & Increase Your Refund
The end of the year is here, which means it’s time to start thinking about preparing for your year-end taxes. Waiting until the last minute could mean missing some opportunities for a better return. This review can help you get ready to file, increase your refund, avoid some common mistakes, and determine how you want to file taxes for this year.
The most obvious first step is to start gathering your necessary tax documents, such as receipts, canceled checks, receipts from charitable donations, and other essential paperwork before the end of the year.
Get organized by making a list of things you need to wait for, such as W-2’s or 1099’s from places you worked and year-end statements from investments. Make note of life changes, such as marriage, divorce, new babies, buying a home, or returning to college.
Figure out which tax deductions you may be eligible for, such as Earned Income Credit, Limited Earning Credit, and so on. Think about things you would like to write off this year, such as an extra mortgage payment, pay property tax early, have surgery, donate to a charity, or purchase something for your business you want to deduct.
Finally, consider increasing the amount you contribute to your retirement plan. Being organized and thinking ahead can help decrease the amount you pay in this year.
Increase Your Refund
If you work for a company, you can plan during the year to pay more or fewer taxes by increasing or decreasing the number of deductions you take. Be sure to deduct all donations you make over the year. Keep track of non-reimbursed items you purchase to do your job or professional fees, such as union dues, licensure fees, and a personal cell phone used for work.
Don’t forget some deduction like alimony and a dependent child or adult’s care. Increase IRA contributions, refinance your home when interest rates are low, or start a business in your home.
Most Common Mistakes
Mistakes can delay your tax refund, and the IRS may need to contact you before it can be processed. These are some of the most common mistakes made. Incorrect ormissing Social Security numbers, incorrect spelling of a name as it is on file with the Social Security office.
Wrong filing status, math mistakes, incorrect bank account numbers, incorrect electronic filing PIN’s, or a missing signature or date on the form. An error in figuring tax credits or deductions will also hold-up the return. Whether you file yourself or use a tax service, be sure and double check the small details.
Tax Service or Do It Yourself
If you do your taxes, it will save you the money you would have paid an accountant. Anyone can file his or her taxes for free, and if your taxes are not complicated, then this might be the best option. You have the peace of mind that everything is included in your return unless your taxes are complicated with many different forms.
Doing your own taxes can give you some financial insight and change how you manage your finances throughout the year.
The downside is that you will spend more time doing your taxes and the tax codes can be complicated and difficult to understand. There is online help, but it can be insufficient. Without help, you are 100 percent responsible for your return, and there are risks of making an error.
Preparing your own taxes or using a service is completely up to you and your comfort level with completing your taxes with an online program.
Top Online Tax Services
The number one rated online service is H&R Block with high ratings for security and data protection, tax filing services, easy navigation and registration, customer support, and a good value for the money. Next are Turbotax Intuit and FreeTaxUSA both rate almost as high as H&R Block in all areas. Of note, FreeTaxUSA is not completely free for each service, but the costs are low. All are good choices.