Tax Mistakes to Avoid This Tax Season

The tax filing season is just around the corner. For those that file early, it is also the time to prepare tax returns. There are certain common mistakes that taxpayers commit while preparing and filing taxes. They are:

1.      Not filing taxes because  you do not have the resources to pay

Many taxpayers assume that if they do not have the money to pay the taxes they owe, they should wait to file their return. This leads them into tax debt, which if it remains unpaid, keeps growing because the IRS charges penalties and interest for failure to file as well as failure to pay. To avoid falling into tax debt that becomes impossible to pay, always file your return and pay as much as you can. It will bring down your penalties and interest, which will help you to pay back the remaining amount easily.

2.      Miscalculations

Even though the IRS corrects miscalculations without asking the taxpayer to amend the return, they may not like it if you have understated your income, even if by mistake. Before filing the tax return, re-check the calculations. Even if the return was prepared by a tax preparer, you should review the form once yourself before filing. 

3.      Not answering IRS notices

The IRS sends many kinds of notices. Some are just for giving information to taxpayers. For example, the Form CP01 is for letting a taxpayer know that their claim of identity theft has been verified and that they will place an identity theft indicator on the taxpayer’s account. There are some notices that require a response. Ignoring notices from the IRS may lead the IRS to take aggressive steps. 

4.      Taking refund-related loan

There are chances that the IRS might turn down deductions or credits on your return, which will reduce your refund amount. Taking a loan on the refund is risky, and should be avoided.     

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