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:
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.
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.
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.
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.