MISTAKE #1: Completing a Paper Tax Return by Hand
Top Tax Return Mistakes Made By Self Preparers
With the advent of consumer-friendly tax software, it’s incredibly easy to prepare your own tax return. Many of my clients first reach out to me because they’ve been self-preparing and made an error that has resulted in an IRS notice or audit. Our blog series about top tax return mistakes made by self preparers addresses these mistakes in turn.
There are still a lot of people out there who just don’t see the need to pay for tax software or an accountant. So they prepare their own tax returns, by hand, with a pencil and a calculator, and submit the return to the IRS. The IRS frequently issues a list of “Top Tax Return Mistakes,” and all but one of them could be avoided by using a tax software package and E-filing the tax return. Let’s take a look at a recent list from the IRS.
1. Wrong or missing Social Security Numbers; wrong or missing names.
These are errors that are automatically detected when trying to E-file. The IRS will reject the return, and you can easily go back into the program and fix the mistake and E-file again, without any delay to processing your return.
2. Math mistakes and errors in calculating credits or deductions.
Tax software programs automate these calculations and take human error out of the equation.
3. Forms not signed or dated.
Your electronic signature is recorded when E-filing and your tax return is dated by the E-filing system.
4. Filing status errors.
Most tax software will walk you through the process of choosing your filing status so that you end up with the correct one.
5. Wrong bank account numbers.
Well, in this case, tax software is no help! Don’t write the wrong bank account number on your return. That said, if you do, take heart – the bank will usually detect the error when your name and bank account number don’t match their records and the deposit will be rejected. The IRS will then send you a paper check, which delays your refund and causes some unneeded stress when your tax refund doesn’t arrive when it’s supposed to.
So put the calculator and eraser down and turn on your computer. Many tax software companies offer free filing for the simplest federal returns, and for those with more complicated situations, it is well worth the price to be able to use a well-designed software package that helps you avoid common errors. Not comfortable with using a computer to prepare your tax return? Think about hiring a qualified tax preparer to do your taxes this year.