5 Common Tax Mistakes People Make

Taxes understandably present challenges for many people. And with these challenges often come unintentional mistakes. Unfortunately, these mistakes can cost you, so it’s important to know what to avoid during tax season.

Here, we discuss 5 common mistakes people make and what you can do to prevent them. It pays to know as much as you can about the tax code. At Coast One, we want to help you minimize errors so you can get the most from your taxes. So read on to learn more and find out how you can avoid making costly mistakes.

1. Failing to Report Income

Not reporting all of your income will quickly put your return on the IRS audit list. When you start preparing your taxes, you must remember that you are obligated to tell the IRS all the money you made in the previous year.

This is true whether it is part-time income, bank account interest, or your brokerage account dividends. Moreover, don’t forget that unemployment benefits are also taxable income that you must report. Due to the pandemic, many people were forced to sign up for unemployment.

If you fall into this category, you might be unclear as to what’s expected of you when it’s time to file your taxes. You should get in touch with a respected tax service. They will make sure all proper channels are taken, and guidelines are followed. 

2. Filing Late

Most people who file their tax returns can expect to get a refund. So if you plan to get a refund from the IRS, it’s worth taking action as soon as possible. The sooner you file, the sooner you can get your return. Many people fail to file when they know they’re getting a return.

Don’t make the mistake of filing later if you can help it. There’s no question that it pays to get an early start on your tax return. So if that means hiring a professional service to do them for you, the investment could be well worth it.

3. Doing Taxes Last-Minute

If it can be helped, you don’t want to wait to complete your taxes. The earlier you can begin preparing them, the fewer mistakes you are likely to make. As the adage goes, “Haste makes waste.” Thus, it is important to get an early start on your taxes so you’ll have plenty of time to review your paperwork.

Do you struggle with your taxes? Maybe you have a hard time understanding the intricacies of filing? If so, you should definitely have professional assistance in your corner. An established tax service will ensure that no mistakes are made, thereby getting your return to you sooner.

Unfortunately, many taxpayers file at the last minute. This causes a flood of returns to hit the IRS, which can further delay your taxes. Get a head start and enjoy faster response times from the IRS.

4. Confusion Over Deductions

The IRS provides a large number of profitable tax credits and deductions for filers, which can greatly reduce their tax liability. For example, if you are a low-income person, you may be entitled to claim an income tax credit.

This is particularly valuable because it can be fully refunded, meaning that if the credit reduces your tax liability to less than $0, the IRS will pay you. And if you have kids, you can benefit from the Child Tax Credit. 

If you are a homeowner, you can also deduct some expenses. These include expenses like your property taxes or mortgage interest if you itemize it on your return.

5. Filing Paper Taxes

It takes the IRS time to catch up with paper returns. So if you can avoid it, don’t file your taxes the old-fashioned way moving forward. Instead, file electronically and enjoy faster response times in your tax return.

If you use a tax specialist to file your income taxes, you can expect electronic filing as quicker results. Filing electronically is also a great way to minimize mistakes. And when there are no mistakes, you can look forward to getting your return that much faster.

Hire a Professional Service

When you know which mistakes to avoid during tax season, you can ensure a smoother process and a faster return. Remember, it’s best to secure the services of a trusted tax firm if you often struggle with filing your taxes.

If you are ever unsure about your taxes and the correct action to take, let an experienced tax specialist take care of them for you. In doing so, you are far less likely to have mistakes in your documentation, thereby ensuring the best results possible.