Are you Making These Common Mistakes on Your Tax Returns?
- March 24, 2017
- Posted by: [email protected]
- Category: Blog
Dealing with problems with the Internal Revenue Services (IRS) is challenging enough, but the associated stigma makes the whole ordeal particularly terrifying. The truth of the matter is, many issues with the IRS in Austin, TX and around the country are not a matter of an individual or business deliberately misrepresenting the state of their affairs. Many problems are a result of making common mistakes during their tax preparation. They may have misunderstood when their information and payments were due. They’ve made rudimentary clerical errors. Perhaps they’ve genuinely forgotten to report key details when they organized their documents and filed. It’s always a good idea to hire a professional bookkeeper and, at the very least, a tax preparation expert to avoid these common mistakes, preserve your reputation and assist you with a tax planning strategy.
Here are three basic mistakes that catch good people every day.
1. Math- It’s Important
This seems like a no-brainer, but it’s VERY easy to make little mistakes in calculating expenses, income, etc. Little mistakes that end up becoming BIG problems. Always triple check your work. Do as much of your filing online as possible- online tools often catch mistakes and numbers that don’t quite add up, reducing potential issues in the future. It’s not just your calculations that you need to do carefully- many mistakes happen as the numbers are being copied into the forms. Miscalculating deductions is also very common. Whether you are overinflating your deductions or underutilizing them- these mistakes will cost you in the long term.
2. Stay on Top of Deadlines
One of the fastest ways to find yourself in seriously hot water with the IRS is by missing deadlines. Every time you file late, you are hit with penalties. The longer you wait, the penalties- and interest- continue to accrue. Even if you make the deadline but only make a partial payment, you will find yourself in a difficult situation. The IRS penalties continue to accumulate until your case is current, meaning that the burden continues to grow until your taxes are up to date. What was originally a possibly manageable tax debt suddenly spins into a crushing burden.
3. Ommissions Can Be Worse Than Errors
Failure to report the entirety of your income, even by mistake, can trigger an audit and result in penalties and continually accruing interest on the amount owed. It might be years before the oversight is registered and all that time the amount owed to the IRS grows. Similarly, incorrectly estimating your taxes will catch up to you in a bad way. It’s crucial to be sure everything that needs to be accurately reported is, and that estimates are as spot on as possible.
The best way to avoid these pitfalls is to hire a bookkeeper to keep your books in good order year round and a tax preparation expert to ensure that you and/or your business are tax compliant every year. Basic IRS filing mistakes happen all the time in Austin, TX and across the country, as illustrated by the IRS website, but they can be avoided with a little help from bookkeeping and tax experts. Not only can they keep you in the black- they can show you ways to grow your business and make sure you are taking advantage of the deductions that apply to you and your company, ultimately saving you more money, and peace of mind, in the long run.