The tax season is here and the deadline to file will come faster than you think. Be prepared so you can avoid these 5 costly tax mistakes.
1. Failure to file
The most obvious mistake is not filing at all. A surprising number of people simply forget to file or think they don’t need to file if they know they won’t owe anything. Some people fail to file because they can’t pay what they owe. Even if you don’t think you made enough money to require filing you could still be due a refund, and neglecting to file would be leaving money on the table. If you owe, failing to file only adds to the penalties and interest involved for not paying on time. If you need more time to gather your documents, contact our office well ahead of the filing deadline so we can help you determine if an extension will be required.
2. Not reporting all your income
Some people mistakenly believe that if a W-2 or a 1099 doesn’t show up in their mailbox then they don’t need to report that income. A company is only required to send a 1099 if they paid you at least $600 during the year, but those smaller side jobs can add up. Failing to report income can lead to stiff penalties from the IRS.
3. Failure to plan ahead
Any large financial decisions throughout the year can have an impact when it comes time to file your taxes. Did you update your 401(k) or IRA contributions after your annual raise? Did you sell stocks or a piece of real estate during the year? Did you remember to file quarterly estimated taxes on any self-employment income? These can come back to haunt you when you begin filling out your tax return.
4. Missing eligible deductions and credits
This is where having an experienced tax professional can really pay off. Attempting to take deductions or credits you don’t qualify for can land you in hot water with the IRS. On the other side, overlooked tax deductions or credits you are eligible for can potentially cost you hundreds when calculating your tax refund or balance due.
5. Signing without reading
You are responsible for the accuracy of all the information contained in your return even if a tax professional prepared it. Read it carefully. Did you have other income you forgot to mention? Were you expecting a tax form that never arrived? Triple check your social security numbers, bank account numbers, and the spelling of your names.
At Bacon & Gendreau, we have decades of experience helping our clients with all their tax and financial needs. Our financial services are trusted and reliable without the intimidating cost for a simple tax return. Let us take the hassle out of tax season for you. Call 860-216-2195 to schedule your appointment.