No one wants to pay more taxes than they have to, and the best way to make sure you don't pay a penny more than necessary is to avoid common tax return mistakes.
If you’re not careful, you could pay penalties or even interest on top of your taxes. That’s why it’s essential to familiarize yourself with the most common mistakes people make on their tax returns. In this blog post, we’ll give you some tips on protecting your money and making sure you file your return correctly. Let’s get started!
Income Report
One common mistake people make is not reporting all of their income. It can be a costly mistake because if you don’t report all of your income, you could owe taxes on that income plus interest and penalties. So, be sure to include all sources of income when you’re preparing your tax return. It includes income from jobs, investments, and even cryptocurrency.
Deductions and Credits
Another common mistake is not taking all the deductions and credits you’re entitled to. It can cost you money in two ways: first, you’ll pay more taxes than necessary, and second, you could miss out on valuable tax breaks. So, be sure to take advantage of all the deductions and credits you’re eligible for. It includes common ones like the mortgage interest deduction and the earned income tax credit.
Filing Status
Your filing status is an important part of your tax return, and it can have a significant impact on your taxes. If you’re unsure which filing status to use, it’s best to speak with a tax professional. In general, though, the most common mistake people make is using the wrong filing status. For example, if you’re married, you might think you must file a joint return. But in some cases, it might be better to file separately. So, be sure to choose the correct filing status for your situation.
Exemptions
Another common mistake is claiming too many exemptions. It can cost you money in two ways: first, you’ll pay more taxes than necessary, and second, you could trigger an audit. So, be sure to claim only the exemptions you’re entitled to. It includes common ones like the standard deduction and the personal exemption.
Dependents
One common mistake people make is not claiming all of their dependents. It can be a costly mistake because if you don’t claim all of your dependents, you could owe taxes on that income plus interest and penalties. So, be sure to include all sources of income when you’re preparing your tax return. It includes income from jobs, investments, and even cryptocurrency.
As you can see, there are a few common mistakes people make on their tax returns. But by familiarizing yourself with these mistakes and taking steps to avoid them, you can protect your money and ensure that you file your return correctly.
If you have any questions about your taxes or need help preparing your return, contact CheckM8 Tax. We’re here to help!