Americans can file their tax returns several months before they’re due, but about a third wait until the very last minute. Scrambling to prepare your taxes can result in a slip-up or two — which may cost you in the form of a smaller tax refund, a larger tax bill, or even a dreaded audit letter from the IRS.
The best defense against errors is avoiding them on your return in the first place (and, when possible, preparing for tax season ahead of time). Returns for the 2022 tax year are due April 18, 2023. Here are easy ways to avoid some of the biggest tax mistakes.
Filing a paper return
Filing a paper return isn’t a mistake, but “if your return is delayed or lost in the mail, it could be a huge headache to deal with,” said Leslie Tayne, a debt resolution attorney and personal finance expert. “It’s better to file electronically because it takes significantly less processing time.” Plus, tax software can automatically check for tax breaks and apply the latest tax laws.
Forgetting to report all your income
The IRS expects you to report any income you received during the year, whether it’s reported on a W-2 or it’s cash you received under the table. “If you file your taxes and fail to include that income, you may face interest charges and a late filing penalty” when the IRS finds out, Tayne said.
Goofing up basic information
If you somehow misspell your name or leave a digit off your Social Security number, the IRS may reject your income tax return altogether. But the agency will tell you right away and let you make it right. Keep in mind: If someone in your household doesn’t have a Social Security number, you can list an Individual Tax Identification Number (ITIN) instead.
Not using the best filing status
Your filing status affects the tax rate applied to your income and certain tax breaks you can claim, so “choosing the wrong filing status can result in a lower tax refund, a bill for additional taxes, or even an audit,” Tayne said.
If you’re unsure which status to use — single, married filing jointly, married filing separately, head of household, or qualifying widow — then consider using tax-filing software or checking out the IRS’ Interactive Tax Assistant.
Making math errors
The IRS caught more than 9 million math errors on last year’s tax returns, ranging from simple addition and subtraction issues to complex calculations gone wrong. Many of those mistakes came from crunching the numbers for the child tax credit. When preparing your taxes, it’s a good idea to double-check your math or use tax software that does the heavy lifting for you.