4 Minute Read
No one deliberately sets out to screw up their income taxes. But even when we have the best of intentions, we can still make mistakes that cost us time and money.
Here are just a few of the slip-ups Dave’s Facebook fans made in the past, plus our simple advice that will help you steer clear of the same tax-filing blunders.
Fly Under Uncle Sam’s Radar
I haven't filed [my income taxes] in years. I want to open this door and get this fixed. I need to slay this dragon that is hanging over my head. —Robin W.
One of the worst mistakes you can make is not filing your taxes. Robin W. has figured it out though. If you’re behind on filing your income taxes, don’t put it off any longer. Even if you end up owing the IRS, you’ll feel better once have a plan to take care of it.
File Your Taxes Willy-Nilly
Last year we transposed two numbers in my daughter’s Social Security number. We only got a third of our refund back and had to make many long phone calls and write a few letters before we got the other two-thirds—six months later! —Cheryl B.__show_inline_mbox__
Check, double-check and triple-check all the information on your tax forms—even familiar information like your address and Social Security numbers. As you can see from Cheryl’s story, one mistake can cost you time and money. It’s worth an extra few minutes to be sure everything is correct.
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Count Your Chickens Before They’re Taxed
My husband was so sure one year that we were getting a refund that he delayed doing our taxes until October only to find that we owed money! We had to pay $1,000 in late fees and interest plus the $5,000 that we owed. —Lisa O.
Procrastination rarely works in your favor, especially when it comes to income taxes. You should have all the tax documents you need to file your taxes by mid-February, so go ahead and get it done. If you’re getting a refund, you’ll have it that much sooner!
Panic and Make a Bad Situation Worse
I’m a CPA, and the biggest nightmare I’ve seen people who lose their jobs panic and cash out their 401ks. Tax time comes, and they have no money and owe big on their taxes, plus they have to pay 10% early withdrawal penalty. —Jean Z.
A job loss is tough enough, but when you cash out your 401(k) to make ends meet, you give yourself a triple-whammy. You trigger a taxable event for the year, you get smacked with a 10% penalty, and you cripple your retirement savings plan. Instead, cut expenses to the bare bones and pound the pavement for another job. Anything that brings in money will do until you find a position that suits your skills.
Put Your Trust in a $19.99 Piece of Software
Thanks to misguided [tax filing software], I owe nearly $5,000 in back taxes that I am hoping to pay off this year. I was lucky to find a great tax professional who helped reduce it from $8,000 to $5,000. —Sarah S.
We hear stories like Sarah’s all the time. Tax software works well for people with simple income tax situations, but most people will do better by working with a tax professional who will make sure they claim the correct deductions and credits. They save money, often in the form of larger refunds, and they have peace of mind knowing their taxes were done right the first time.
Assume Your Tax-Prep Guy Has a Ph.D. in Accounting
I went to [a tax-preparation company], and after two hours the guy had put most of my information in all the wrong boxes. When I pointed it out, he slid me the keyboard and monitor and asked me to fix it! —Cory M.
Tax-preparation specialists like the one Cory worked with are (usually) trained to help you fill out your tax forms, but they can’t give you the same service as a qualified tax professional. When you hire a tax pro, look for an experienced CPA or Enrolled Agent who can help you maximize your refund and show you how to save on your taxes in the future.
All of Dave’s tax Endorsed Local Providers (ELPs) are either CPAs or Enrolled Agents. You can trust them to help you save time and money on your taxes this year. Find your ELP today!