Taxes are serious, complicated business, but most people who file aren’t certified accountants. If you’re not careful, these costly mistakes could have serious financial and legal consequences.
Doing your taxes yourself is a great way to save on accountant fees. But inexperienced people can commit common tax mistakes. If you want to file the correct taxes and keep the IRS off your back, it’s important to understand how to file and what’s most important.
1. Whoops! I accidentally stole an identity!
Okay, so it’s pretty hard to steal an entire identity by accident. But there’s the potential for serious problems if you provide an inaccurate Social Security number, or fail to write your Social Security number at all.
As far as the IRS is concerned, that number is your entire identity. Your name doesn’t matter. Other people might share your name, but you’re the only person in the world with your SSN. (Assuming no one’s stolen your identity.)
The IRS won’t even process a tax return that doesn’t have an SSN. Plus, you need an SSN to get tax breaks like the child tax credits.
2. I spell my name differently on Wednesdays.
Most people have nicknames of some sort. But when it comes to tax filing, the name you write has to match up to the name on your Social Security card. Otherwise, you’ll cause discrepancies that will delay your tax return.
If you’ve changed your name, you need to make sure all legal name changes have gone through before you use the new name on your tax return. For the most part, this means double-checking that the SSA has updated your records.
3. I don’t care if my son is 30; he lives on my couch, so I should get to claim him as a dependent.
Unfortunately, the IRS has strict outlines for who qualifies as a dependent:
- Children under the age of 18
- Adults ages 18 to 24 who are enrolled in college
- Adults of any age with permanent disabilities that require at-home care
Even if your 25-year-old son is completely financially dependent on you, he can’t qualify on your tax return.
4. I forgot I’m not technically married.
Some taxpayers mistakenly check the wrong box on their filing status. You’ll see it most often with people in the first year following a divorce. They’ll check one of the “married” boxes instead of the “single” one.
This error could cost you dearly, though, since single taxpayers have access to certain tax breaks that married couples don’t. This is especially true if you’re a single parent with full custody of dependent children.
5. I spend exactly $100 on travel for business… every single time.
It’s easier to add round numbers, and even advanced tax software does some rounding. The IRS says that dollars and cents can be rounded on a Form 1040.
But with business expenses and deductions, consistent rounded numbers look like you’re making up expenses. The IRS will want documentation in the form of receipts. Those receipts have to match your tax information, or you’ll be in a heap of trouble.
6. Even if my bank account number is wrong, the money should still get to me through sheer willpower.
For your convenience, the IRS can deposit your tax return directly into your bank account instead of mailing you a check. But you have to give them the right number.
The wrong routing number might make you lose your entire refund. Check, double check, and triple check your bank account information before you file.
7. So I inherited a ton of money and made bank on the stock market, but that’s not work, right? Who needs to report that kind of nonsense?
You might think you can avoid reporting income from non-work sources, but the IRS doesn’t play that game. If you did any independent contract work in excess of $600, you’ll receive a 1099 from your client. Your client will also file a copy with the IRS. You have to report that income, or the IRS will know your tax paperwork is inaccurate.
There are 16 different 1099s that cover everything from contract work to stock profits to inheritance income. If you receive a 1099, you have to include it with your tax paperwork.
8. I did a nice thing for someone, and I’m not even getting paid for it.
Okay, it goes without saying that you should do charity for charity’s sake, not for the sake of a payout. But philanthropy does have tax benefits. Make sure you’re getting them.
Anything you donated, whether it’s cars or cash or clothes, should be recorded on your tax paperwork. These valuable deductions could save you from paying hundreds or thousands more in taxes.
9. I left cursive behind in second grade. I’d rather die than sign my name.
Okay, most people hate cursive, especially when typing is easier nowadays. But you absolutely must include a signature on your tax return. A lack of signature is a lack of authentication. The IRS will refuse to process the return just like with a missing SSN.
If you’re filling out your documents online, don’t forget to include an electronic signature.
10. The IRS made up a bunch of new rules, and now apparently I’m doing everything wrong.
Please, please save yourself a lot of headache and grief. Familiarize yourself with the new tax rules each year. AARP has an easy-to-parse explanation of every change for the 2019 year.
11. So apparently I’m not allowed to deduct my entire vacation as a business expense, even if I had a five minute conversation on the phone with one client once.
Independent contractors can deduct the cost of traveling to meet clients. But you have to be smart about what you count as a business expense. If the expense is obviously frivolous and personal, and you can’t justify to the IRS why it was necessary for your business, you could be looking at tax fraud charges.
12. Math is hard and I don’t like it.
Yeah, not everyone is math-oriented. Even with a calculator, it’s still possible to slip and miscalculate, especially if you’re adding a string of numbers from multiple 1099s.
Basic arithmetic errors are some of the most common tax mistakes. Be really sure your math is correct, and if you’re not confident, seek help filing taxes. Even if you don’t hire a CPA, tax help is readily available through articles online.
It’s super important to get tax help if you’re not familiar with your tax documents. The tax code is complicated, so expert help filing taxes is just logical if you want a correct 1040 or 1040EZ.
13. Oops! Where has the time gone?
Even if you have completely correct taxes, you’re going to face trouble if you file your 1040 or 1040EZ late.
- Triple check your math, personal information, and signature
- Include income from all 1099s received
- Keep receipts of business expenses
- Stay up-to-date on new tax laws
- Look for help if you feel out of your depth
Tax season doesn’t have to be overwhelming. As long as you’re careful and meticulous, your return should go off without a hitch.
By Katherine M.