With 2014 in full swing and tax season right around the corner, it’s time to start prepping those dreaded documents. Even though the process of filing for taxes has been streamlined through the development of computer software and tax programs, for many of us the possibility of screwing up is still a stark reality. Even tiny math errors can cause issues, in turn costing you money or delaying the refund process altogether.
Math or Computing Errors
Whether or not you use software, mathematical errors are a common mistake when filing. These minor oversights can result in a correction notice and even delay your tax refund. If you miscalculate something on your end you may end up receiving less of a refund than you initially anticipated.
Despite today’s advanced technology, computers are fickle machines. One error in your calculations or in the computer’s software and you’ll have incorrect results. Of course, using tax software will greatly reduce your chances of making a mistake, but the handy calculators can’t help you if the initial numbers you input are incorrect. If you do make a mistake, the IRS will most likely find it, let you know and correct the error. But, if it raises red flags this could slow down the process or even trigger an audit.
Tax deductions are an essential part of filling taxes; they give you a chance to let the government know that you had expenses that should be recognized through reprieves. There are plenty of deductions to consider and some are obvious like business expenses or charitable contributions but others are smaller and may elude you. Here are several deductions that are often missed:
State Sales Taxes
This is often forgotten due to the fact that it expired in 2012 and was reapproved in 2013.
Small charitable donations.
The big ones are hard to miss but little ones can add up too. Don’t forget to count any donation you made out-of-pocket.
The cost of a job hunt. It’s often said that if you are unemployed then you should treat looking for a job like it is your job. Well the IRS treats it that way too. You can get your job hunting expenses deducted if you keep track of things like travel costs, business cards, and resumes. You can’t deduct expenses for looking for your first job unless you had to move in order to get to it. If that’s the case, you can deduct the moving expenses.
If you are self-employed there are several ways it can be deducted in your taxes, like baggage fees when traveling and Medicare premiums. There are many more besides these. Make sure you know all your options before you file your taxes.
Forgetting About Income Tax
For many people, employers take care of withholding money for income taxes, but freelancers and the self-employed are on their own. This means if you are your own boss then you’re responsible for setting aside a part of your income for income, Social Security, and Medicare taxes.
Wrong Names or Numbers
We know that a math error can lead to some serious mistakes, but they aren’t the only things that can cause problems if entered incorrectly. If you get a name or social security number wrong, you can cause problems for yourself.
You might be asking yourself, “Who would get their name wrong?” Well, this is an especially common problem among recently married couples or anyone who has recently changed their legal name. If you have recently changed your surname in light of a marriage or divorce, make sure you notify the Social Security Administrations immediately.
Improperly Handling a Student Loan
Student loans are becoming more and more prevalent in this country so if you have one, take the time to handle it in your taxes. You can deduct student loan interest payments-with some exceptions. The maximum interest you can claim is $2,500. There are also limitations based on income, which is around $75,000. If your parents are paying for your students loans you can still file for the deduction because even though the payments are coming from your parents you are liable for the debt.
These are several other areas where you should be careful when filing taxes. If you think that you or your business’ taxes are too difficult to handle then seek IRS tax help.
This post has been provided by Levy & Associates.
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