Avoid these mistakes on your tax return

Posted by citiYellow

Saturday, 21 January 2012 07:31

(ARA) - The average American spends approximately 12 hours preparing a Form 1040 income tax return, according to the Internal Revenue Service. With so much time invested, the last thing you want to do is make a mistake on your tax return - especially one that delays your refund.

Fortunately, several of the most common mistakes made on tax returns are simple in nature. For instance:

* Incorrect Social Security numbers. They must match perfectly with what's on Social Security cards because the IRS compares tax return information with the Social Security Administration's database.

* Misspelled names. All names on returns must also match Social Security cards. Pay special attention to dependents' last names, as those tend to be misspelled.

* Filing status errors. If you're not sure which of the five statuses you are, see IRS Publication 501.

* Miscalculations. In addition to math errors, taxpayers often miscalculate amounts related to their taxable income, withholding and estimated tax payments, the Earned Income Tax Credit, the Child and Dependent Care Credit, the standard deduction for age 65 and older or blind, and taxable amounts of Social Security benefits.

* Incorrect bank account numbers for direct deposit or payments. Double check the routing and account numbers for your financial institution so that you either receive your refund in a timely fashion or pay your balance on time (thus avoiding penalties and interest).

You can prevent a lot of errors like these by simply not rushing, says TaxACT spokesperson Jessi Dolmage. "Prepare your return when you have the fewest distractions. If you're interrupted, stop and come back to your return later, or even the next day. You don't have to do your taxes in one fell swoop.

"Another easy way to avoid these types of errors is to use a tax preparation solution," states Dolmage. "Online and download solutions like TaxACT allow you to import information from last year's return, which reduces the chance of mistyping key information. The programs also provide step-by-step guidance while completing the forms and math for you, and they check your return for errors and missed opportunities."

Regardless of how you prepare your taxes, print and review the information on your return before filing. When you're ready to file, e-file your return. Unlike paper filers, you'll receive confirmation when the IRS receives and processes your return. Combined with direct deposit, you can have your refund in as few as seven days.

Dolmage adds that the IRS won't send you a notice for overlooked tax breaks. Software solutions like TaxACT help you take advantage of all your tax breaks. If you're not using software, watch out for these tax credits (a direct reduction of your tax liability): the Child Tax Credit; the Child and Dependent Care Credit; higher education credits; the Saver's Credit; and energy-saving credits.

For tax return information, visit www.irs.gov. Learn about TaxACT products, including its Free Edition that allows everyone to prepare and e-file their federal return free at www.taxact.com.