Tax-Time Shortcuts Just Don't Pay Off
from daveramsey.com on 28 Feb 2011
You know the feeling. It's just dawned on you that you've made a mistake—something that could have been avoided. You smack yourself on the forehead and declare in disgust, "I knew better than that!"
Tax time is full of those moments, so we asked our Facebook fans to share their tax-time nightmares and their lessons learned.
Keep Good Records—But Not in a Shopping Bag!
You may have tuned out all that advice about which financial records to keep and for how long. But it was suddenly important to LisaGrace Alsbury's parents when the IRS came knocking.
"(My parents) found out last year that the IRS had ‘lost' two of their previous tax returns and payments," she explained. "The burden of proof was, of course, on my parents to prove that they had indeed filed and paid their taxes."
LisaGrace's parents found the cancelled check for the first year's taxes but not the second. They had to pay again!
As important as it is to keep complete tax records, where you store them is equally important. Bridgett Baron will be the first to tell you, a shopping bag isn't the best choice.
"My husband mistook the shopping bag of financial papers for the recycling," Bridgett said. "He threw it all out back of our condo building."
Her husband had to dumpster dive in a full suit to recover their records. Yuck!
Check And Double Check
It would be great if everyone did his or her job perfectly at all times, but in the real world, people make mistakes. At tax time, those innocent mistakes can make a huge difference to your tax bill.
Michelle Murphy calculated her income tax withholding carefully so she would not get a big refund or have to pay at tax time.
"(But) I was not attentive to the fact that (my employer) didn't take any federal taxes out of my check all year due to a clerical error," Michelle said. She didn't realize the mistake until she received her W-2 the next year.
"I'm paying stupid tax for my taxes this year," she said.
Josh Neilson learned the importance of double-checking his tax return documents when he forgot to claim his new baby.
"We are getting $5,000 back, but that means the government had my money for a whole year!" he said.
Tax Software Isn't Foolproof
Jennifer Clark learned that it's not worth trying to save a buck and do your own taxes using tax software. The software doubled her income when it filed her forms, and the next thing she knew, the IRS was trying to debit $40,000 from her checking account!
"We immediately found one of Dave's pros to get it right," she said.
Find A Professional You Can Trust
Dave's tax Endorsed Local Providers (ELP) are professionals who will take the time to explain your taxes and make sure you get every deduction you're eligible to receive. Don't wait until the tax crunch. Contact your tax ELP today!