10 common tax-filing mistakes to avoid
October 13, 2009 · Tagged with Taxes
The envelopes, or in some instances, labels printed with the IRS delivery information, are color-coded to notify tax processors whether you’re getting a refund or are sending in a check. By using the appropriate envelope or label, your 1040 will get to the correct office sooner, meaning you’ll get your refund more quickly.
Similarly, the pre-addressed envelope or label will ensure that your return goes to the proper processing site. The IRS has reorganized its service center operations in recent years, so it’s possible your return could be handled at a different location than it was last year. The envelope or label has the correct delivery data.
Picking the wrong 1040 form
There are three types of 1040 forms, and tax experts, including those at the IRS, suggest taxpayers use the simplest one possible that meets your tax needs. But make sure that it does indeed get you the best tax result.
In some cases, the long Form 1040 is the best move, even if your tax life is not that complicated. You don’t have to fill out every line on the two-page form, just the ones that apply to you. And since it offers several more ways to cut taxes than are found on the slightly shorter 1040A or shortest 1040EZ, it could really pay off.
So take a few extra minutes to look over all three forms and determine which one best suits your tax situation.
Omitting some forms
Again, this is a problem primarily for paper filers. These taxpayers need to be sure they include their W-2 forms (Copy B) to avoid delays in processing their returns.
If you received a Form 1099-R that reports federal income tax withheld, Copy B of that form needs to go into the envelope, too.
And if you have several additional forms, don’t forget those either. That extra paperwork you worked through to gain a tax credit or deduction won’t do you any good if it doesn’t make it to the IRS. The IRS also recommends that you put the forms in proper order behind your 1040. Each one has an attachment sequence number in the upper right corner, just beneath the year notation.
Overlooking unearned income
Thanks to your Social Security number on financial accounts, the IRS knows exactly how much you make in interest and dividend income each year. The tax agency gets copies of your Form 1099 earnings each tax season, and they will use the documents to double-check your filing information.
So be sure to collect all those earnings statements and put the total taxable amount on your return. If you don’t, IRS return examiners will let you know what you forgot, usually along with an added bill for penalty and interest charges that accrued because of your interest and dividend filing oversight.