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The Liberty Blog: 10 common mistakes made by taxpayers...

Updated: Jan 25

Liberty Financial Solutions, LLC: We worry about the IRS so you don't have to....


"10 Common Mistakes Made By Taxpayers:"


Welcome friends!


With the 2023 version of tax season beginning to heat up, here's a few tips to help you as begin to gather your information to file your income tax returns. Not making these mistakes can save you a lot of time (and money) down the road. So, without further delay, here are 10 common mistakes made by taxpayers. Here's to a successful tax season!


Mistake #1 - Filing Your Return Late


Here's the deal friends. Even if you can't pay your entire tax liability at the time it's due, make sure that you file your tax return on time. You would be surprised how many individuals miss the tax filing deadline. When you file late, the IRS starts hitting you with "failure to file" penalties and interest. You definitely want to make sure that you file your return on time, and request an extension if need be.


Mistake #2 - Providing Incorrect Information


When you provide incorrect personal information, this leads to a delay in the processing of your return, a delay in the receipt of your refund, and increased scrutinization of your return by the IRS. Incorrect personal information such as social security numbers, addresses, income amounts, and other personal information can all lead to such delays. Trust us when we say, you don't want the IRS taking a closer look at your return. A great way to mitigate this is to take the time to include the correct personal information on your tax return before you file.


Mistake #3 - Math Errors


Simple math mistakes can occur when calculating income, deductions, or credits. Make sure you take the time to check your calculations and make sure the numbers you enter on your return match your W-2's and 1099's.


Keep in mind that the IRS already has a copy of all W-2's, 1099's, and other forms that you receive, so if you don't include the correct amount of income you receive, you can best believe you will be hearing from them. Again, you don't want that. Simple math errors can lead to IRS audits, the assertion of penalties and interest, and ultimately IRS back tax problems. These errors can be avoided; make sure you do so.


Mistake #4 - Not Signing Your Tax Return


Know this. Unsigned tax returns are not valid. The IRS will not process your return or issue your refund unless your return is signed. Always remember to date and sign your return before submitting (even if you do so electronically). Not signing a tax return can and will lead to very lengthy delays and unpleasant experiences with the IRS.


Mistake #5 - Not Reporting All Income


As we mentioned previously, the IRS already knows how much income you should report.


Ensure that you report all sources of income, including side jobs, freelance income, and investment earnings even if you didn't get a W-2 or 1099. Because again, the IRS already knows, and if they don't, they can find out really easily. Don't take the chance and report all income; regardless of how small.



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Mistake #6 - Overlooking Deductions And Credits


On the flip side, so many taxpayers often miss out on deductions and credits that they qualify for. This leaves your hard-earned money on the table. While you want to make sure you report all of your income, you also want to make sure you don't pay more than your fair share of taxes. Therefore, be aware of potential tax breaks you're entitled to and take full advantage of them!


Mistake #7 - Selecting the WRONG Filing Status


Selecting the proper filing status is crucial for determining your correct tax liability. However, you would be surprised how many taxpayers don't get this right. Make sure to choose the status that best fits your personal situation. This link will help you do that.


Mistake #8 - Neglecting Tax Law Changes


Tax laws can change yearly. Actually, they change almost daily. Make sure you stay informed on changes that may impact your tax situation.


Mistake #9 - Not Keeping Proper Records


Of all the mistakes that are made every year by taxpayers, this one is perhaps the most prevalent. Ensure that you maintain organized records of your income, expenses, and supporting documents. This can be essential in the case of an IRS audit. If you don't have the proper records, the IRS will disallow the applicable deduction and assert penalties and interest. Also, if you're experiencing back tax problems and tax settlement issues, maintaining proper records will help you resolve the situation much sooner than not maintaining proper records.


Mistake #10 - Ignoring The Advice of Tax Professionals


Finally, numerous taxpayers can benefit from seeking professional tax advice. Yes, it's going to cost some money, but it is almost certainly to save money in the long-run. Tax professionals can help ensure accuracy and identify potential opportunities for savings. Let's face it, you don't want to pay Uncle Sam more money than you have to.


In Closing


That's all for now friends. We hope you found this informative. If you have any questions, please reach out to us at any time. Until next time.



Cheers!



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