I wasn't going to write a post about the tax deadline this year. Then a couple of other bloggers pointed out that my personal finance blogger union contract requires me to write on certain days of the year. (This is why you'll see me still writing about Black Friday, even though I haven't participated in a few years.) The contract mentioned April 15th specifically, because that's the usual tax deadline. However, this year, we've got three extra days to lounge around as the tax deadline isn't until the 18th. (You can thank the folks in Washington D.C. for their Emancipation Day celebrations.) I'm going to hedge my bets and write about the deadline - even though it isn't the deadline.
At this point in the game, there's not a lot you can do to help your taxes. It's possible you could do some last-minute electronic transfers to fund a Roth IRA. However, I think the best thing to do is make sure that you've get your taxes filed correctly. With that in mind here are some of the common mistakes people make so that you can give your own taxes a double check:
- Missing the Deadline - If you think that you aren't going to finish by the deadline, the best thing you can do is File Form 4868 for an extension. The interesting thing about this is that you still have to pay any taxes you owe. So if you think you owe money, you still need to send in a payment. I've always wondered how you are supposed to guess how much money send in if you haven't finished your taxes. I think the IRS views that as "Not our problem."
- Direct Deposit Errors - If you are getting a refund the quickest way to get the money is to get it deposited directly to your bank account. This requires giving them your banking details such as bank's ABA/routing numbers and your account number. If there's an error in this information your money may end up elsewhere. Yikes!
- Not Reporting Unearned Income - Those 1099-INT and 1099-DIV forms that you get from your bank and brokerage are worth paying attention to. These financial institutions are reporting this information to the IRS. In a sense this gives the IRS the power of Santa Claus - they know if you've been bad or good.
- Social Security Number Errors - It sounds like a simple thing, but the wrong social security number in the wrong area and you've got yourself quite a mess.
- Common Errors for those working with paper - If you are a Luddite who still does taxes on paper, it might be time to think about changing.
- Signing your Tax Forms - Back before I had my own tax person, I came close to being guilty of this a couple of times. After all the work with the tax programs and getting them printed out, I just wanted to get it in the mail as quick as possible. It was just too easy to forget the step to pick up that pen. With elecrtical signatures this isn't much of a problem for e-filers any more.
- Bad Math - It's a pain to double-check all the math, but tax software programs like TurboTax do it for your automatically. Embrace your friend, Mr. Technology.
- Incorrect Postage - This is another common error for those doing paper returns. The tax packets can get pretty big and who knows how many stamps you need to put on? Before I started e-filing, I'd take mine to the post office and stand in line for an hour just to make sure it got weighed and stamped in front of me. These days with e-filing, I only have to send in a check with a deposit slip - just a standard first class stamp.
Looking for more common mistakes? Check out this list from Wallet Pop
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