Filing taxes is hard enough. Refiling them because you made last-minute (totally avoidable) errors is even harder.
So this is something I strive to avoid at all costs.
If you’re rushing to submit your taxes by the April 15 deadline, be sure to avoid these six common last-minute filing errors!
1. Simple math errors.
When I'm really rushed, I know to avoid working on my budget. This is because I tend to make stupid mistakes like transposing numbers and adding zeros.
Here, a calculator can only help you if you enter the original data correctly. So if you use a calculator, double check your starting figures as well as your math!
- What can help: E-filing helps you by doing much of the simple math for you, including using tax tables and automatically checking for errors before you file.
2. Entering names and numbers incorrectly.
Whether it’s forgetting to sign your return, entering a wrong social security number or bank routing number, forgetting to fill in dependents' information, or something else entirely—this error directly impacts the financial business of paying what you owe or receiving what’s owed you.
- What can help: E-Filing will definitely notice if you haven’t provided an electronic signature, but the only sure-fire cure for transposed numbers is another set of eyes to spot-check for you.
3. Leaving out sources of income.
While this can be a conscious choice for some, it’s most likely a simple oversight if you’re rushed. The truth is, every cent of income you earned is taxable and should be reported (whether you received a W-2 or a 1099 from the employer or not).
It’s very easy to forget small side jobs, income from an online business, and other types of taxable income if you’re rushing. But this is one primary reason taxpayers get audited, and if you think doing your taxes takes time, imagine having up to a year of your life consumed by the IRS digging through your returns for the last seven years! Yikes!
- What can help: The biggest help you can give yourself is to keep a monthly income ledger so you don't have to scramble to remember at tax time. Failing that, taking a look at your bank statements for the last 12 months (printed or online) will show you all deposits (even transfers from Paypal) so you can more easily reconstruct your full income with accuracy.
4. Failing to claim deductions and credits (or claiming too many!).
Just as you may be tempted to rush through totaling up your income during a last-minute filing, you may be tempted to blow off claiming all of the deductions and credits you’re eligible for—or simply claiming everything you "think" you’re eligible for without checking first.
H&R Block estimates that 20% of self-filers will give up just under $500 in eligible credits and deductions—whether through rushing, not knowing, or assuming ineligibility without checking. As well, filers who try to take mutually exclusive credits, or deductions they haven't earned, will likely hear from the IRS later, with requests for extra forms, documentation and (of course) money.
- What can help: If you can take a look at your previous years' filings, this may jog your memory about lucrative credits and deductions. Also, you can simply be aware of some of the most commonly overlooked credits and deductions. For instance, continuing education, childcare expenses, uninsured medical bills, unreimbursed job hunting and job relocation costs, energy improvements to a home and more.
5. Not taking time to itemize.
"Itemizing" sounds sort of scary to me—like, in addition to getting the answer right, I'm going to be graded on whether I did the work correctly. But in reality, itemizing is a tool the IRS offers taxpayers to potentially pay less in taxes than taking the standard deduction. So itemizing is worth the work, just to see what your options are!
- What can help: Take this free quiz to find out if itemizing might make sense for you (scroll to the bottom of the page to see the start of the quiz).
6. Not understanding how filing extensions work.
All taxpayers have the option to file an extension. All it takes to file an extension is to fill out Form 4868 asking for an automatic (i.e., if you ask for it, you’ll automatically get it) six-month extension. However, before you choose this route, it’s critical to understand how filing for an extension will and won't help you.
An extension WILL give you more time to send in your annual filing forms and backup documentation. It will NOT grant you six more months to pay what you owe.
So if you need to file an extension, you’ll also need to do a down-and-dirty guesstimate of what you owe and send that in by April 15th to avoid very expensive penalties and fees later.
- What can help: If you can't pay what you owe right now, you can also file an Online Payment Agreement form with the IRS to gain an additional 120 days to pay.