Here’s the lineup of the biggest mistakes taxpayers make. And what to do to avoid them.
1. Bad math
According to the Internal Revenue Service, errors in addition and subtraction are the No. 1 mistake taxpayers make. All returns are examined for mathematical errors. Mistakes in arithmetic result in an immediate correction notice. If the error leads to a tax deficiency, you will automatically receive a bill for that amount.
2. Forgetting about interest and dividends
Interest and dividend payments are reported to the IRS by banks, brokerage houses and other financial institutions, and they are cross-checked in about 96% of the cases. As a result of this cross-checking, the IRS sends out notices for taxes and interest on overdue taxes for income that was not reported.
3. Losing track of receipts
You either have proof of your deductions, or you lose them. Always keep your receipts and checks if you want to deduct them. Deductible receipts and checks should be kept for three years.
4. Forgetting to donate unwanted items to charity
Give your old clothes, furniture, appliances and other items away to your favorite charity. The wholesale value of those contributions is allowable as a charitable deduction. Make sure that you get a receipt. No receipt, no deduction.
Remember, you can deduct 14 cents a mile for any charitable work, including the trips to bring the old clothes to the charity.
Call StrategyOne today for help on avoiding these common mistakes.