Did you miss the April 17 tax deadline for 2018? If so, you probably filed for and received a six-month extension from the IRS. Don't relax too much, because October will be here before you know it.
The IRS offers a series of tips to help taxpayers avoid common errors when filing their taxes, whether in April or in October. Consider these helpful hints as you prepare your extended tax filing.
Missing/Incorrect Social Security Number (SSN) – Your filing will be held up or rejected outright if any SSN on the form doesn't match the number on your Social Security card.
Incorrect Names – Similarly, all names included on a tax return must exactly match the names listed on the corresponding Social Security cards. Misspellings or leaving out part of the name may result in processing delays.
Unsigned Forms – Unsigned forms will be rejected. Electronic filings won't allow you to make this mistake – but you will need your Adjusted Gross Income (AGI) from your 2016 tax return as identification if you are filing using new software. You may not need the 2016 AGI if you're using the same software as in 2017, but you should have it on hand just in case.
Math Errors – Tax preparation software can help you avoid simple math errors, as well as more complex calculations like figuring the taxable portion of your Social Security benefits.
Wrong Filing Status – Not sure of your filing status? The IRS Interactive Tax Assistant can help you identify your correct status, as can e-filing software.
Credit/Deduction Errors – With the changing tax laws, it can be difficult to stay current on the credits and deductions for which you qualify. Again, current tax preparation software can help – or you can use the IRS Interactive Tax Assistant for verification.
Expired ITIN – Your SSN doesn't expire, but an Individual Tax Identification Number (ITIN) can. If you're filing with an ITIN, make sure that it's still current. Your return will still be considered on time – but as a fraud prevention measure, exemptions, credits, and refunds can't be considered until the ITIN is renewed.
Incorrect Bank Account Numbers – If you're using electronic transfer for either payment or deposit of refunds, verify the routing and account numbers with your bank. Routing numbers can change, so it's important to check all bank correspondence for any notifications.
The IRS recommends electronic filing to minimize errors, using either the IRS Free File system (for incomes below $66,000) or the Free File fillable forms (for incomes above $66,000). Electronic forms will prevent you from making some of the simpler errors, such as a missing SSN.
Hopefully, you remembered that filing an extension doesn't relieve you of the need to pay your taxes on time. Otherwise, you're looking at a failure-to-pay penalty of 0.5% per month on your unpaid taxes. Failing to pay your taxes or a penalty you owe could negatively impact your credit score. You can check your credit score and read your credit report for free within minutes using Credit Manager by MoneyTips.
Sometimes you can't avoid a tax extension – for example, an employer sends incorrect information and you can't get that clarified before the deadline passes. However, if you filed a tax extension because you simply didn't have your act together, now's the time to prepare for early 2019.
Set up a file for all the tax documents you'll need (such as last year's tax return), along with any receipts if you itemize. Store any item you need in that folder, under the proper category, as soon as they come in. Make sure that any electronic copies are stored safely. Get organized now and avoid early April panic, as well as the hassles of dealing with tax extensions.
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