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Tax Filing Errors to Avoid

March 1, 2016

Checklist of 42 Tax Filing Errors CLIENTS SHOULD Avoid

Taxes are hard enough without making avoidable errors. Before you file, double check to make sure you do not make these errors.

  1. Not signing the return (if you file paper copies)
  2. Number transposition and spelling errors
  3. Unchecked or unanswered questions
  4. Entering incorrect or unpaid estimated tax payments
  5. Missing pages in a paper filed return
  6. Not correcting reason for a tax notice for a prior year, on this year’s return, if there is a continuing issue
  7. Underpaying or overpaying [Ugh!!!] the tax due
  8. Sending your tax check to the wrong tax agency
  9. Not calculating underpayment penalty, if applicable
  10. Not calculating a penalty on an early withdrawal from a retirement or IRA account
  11. Calculating a penalty on a permissible early withdrawal from a retirement account
  12. Paying tax and penalty on IRA distributions that were timely rolled over to another IRA account
  13. Not calculating a penalty if you took more than one 60-day tax free rollover in a 365-day period
  14. Not filing Form 5329 (Additional Taxes on Qualified Plans Including IRAs and Other Tax-Favored Accounts) when it was required and if being filed separately from tax return, it must be signed
  15. Not calculating self-employment tax on freelance income or commissions
  16. Responding to an email notice from a tax agency – they do not send emails. You received spam
  17. Your paid preparer did not sign your return or enter their ID numbers
  18. Claiming the wrong exemptions or omitting a correct Social Security Number
  19. Claiming an exemption for someone that properly can claim themselves (this can occur when a dependent marries during the year and files a joint return; or no longer qualifies as a dependent such as because of excessive income and/or is not a student for at least five months of the year; or a child you support where your ex-spouse is entitled to the exemption under a divorce agreement)
  20. Omitting a Social Security Number for someone you paid alimony to
  21. Not itemizing deductions when you should have
  22. Claiming excessive home mortgage interest deductions is a red flag.  Interest on home mortgages over $1,100,000 is not deductible
  23. Deducting points in full on refinanced mortgages, instead of amortizing them
  24. Reporting mortgage interest and real estate taxes on rental properties as itemized deductions
  25. Not claiming investment interest costs properly and not being aware of limitations
  26. Omitting or reporting incorrect state tax payments and withholdings as an itemized deduction
  27. Reporting deductions that stretch the imagination, e.g. someone with high debt indicated by mortgage and home equity loan interest usually won’t be making cash charitable contributions equal to 16 percent of their gross income
  28. Not properly picking up carry forward expenses or credits from the prior year’s return. This includes charitable contributions, investment interest expense, net operating loss deductions, capital losses, suspended losses from passive activities, alternative minimum tax credits and foreign tax paid credit
  29. Reporting as income the state tax refund you received and that was reported on a 1099 when you did not get a full deduction for that on your prior year’s return because of “disallowance” by being subject to the alternative minimum tax
  30. Not correctly answering foreign account questions on bottom of Schedule B especially when Schedule B is not otherwise required to be filed and then not filing the FBAR FinCEN Form 114
  31. Overstating charitable contributions
  32. Not having proper charitable contribution receipts in your possession when you file your return claiming those deductions
  33. If you made non cash contributions over $500 additional forms must be attached to your return
  34. Not having a certified appraisal if you made a gift of tangible property over $5,000. Your entire contribution can be disallowed because of this.
  35. If your income is sufficiently high, not adding the 3.8% tax on net investment income or the .9% tax on earned income
  36. Real estate professionals that do not claim themself as that possibly subjecting themself to the tax on net investment income
  37. Reporting incorrect cost basis on sales of capital assets. This is common with inherited stocks, stocks received as a gift, or with dividend reinvestment account accumulations or where you had a previous wash sale
  38. Reporting gross sales from brokerage transactions that are less than the amounts reported on the 1099s issued by your brokers
  39. Not reporting proper basis on employer stock sales that were also reported as income on your W-2 form
  40. Self-correcting and reporting the “correct” amount where you received an incorrect 1099 (and cannot get a corrected 1099 in time to file your return). You should report on your return the amount on the 1099, even if it is wrong, and subtract an adjustment on another line so the net amount is the proper income you received
  41. Omitting allowable IRA, Roth IRA, SEP or other retirement plan contributions
  42. Inputting incorrect bank account numbers and information for your tax payment or refund

And… make sure you e-file or mail your return by the April 18, 2016 due date!

One Comment leave one →
  1. 6hawthorne permalink
    March 1, 2016 11:44 am


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