/ Source: The Associated Press
Everyone makes mistakes.
But when it comes to tax returns, errors can be costly.
Check and double-check the items below, which are among the most common tax goofs, according to the Internal Revenue Service and MSN.com tax expert Jeff Schnepper.
- Claiming the wrong filing status: Your filing status determines a number of tax benefits, like the child tax credit, earned income tax credit and dependent exemptions. Filing status choices are single, married filing jointly, married filing separately, head of household, and qualified widow with dependent child. You can't just pick one; each has requirements.
- Wrong Social Security numbers: If these are incorrect, they won't match your government records and the IRS may disallow exemptions, credits and deductions.
- Failing to sign and date your return: If you don't sign, the IRS doesn't consider the return filed. E-filed returns can be electronically signed, and this year the agency is simplifying that process. You or your tax preparer can use a PIN number to complete the filing process.
- Claiming ineligible dependents: Make sure they qualify. If they don't have Social Security numbers, the IRS may disallow the exemption.
- Not claiming (or misusing) the earned income tax credit: Millions of low-income working families qualify, but do not claim it for a variety of reasons. Even if you don't make enough money to be required to file a tax return, you may still be eligible for the credit. Because this is a refundable credit, it often means money back from the IRS. However, check the requirements because some taxpayers who try to claim the credit do not qualify for it.
- Failing to report domestic workers: Some taxpayers do this to avoid paying Social Security and Medicare taxes for their workers, and it's against the law.
- Failing to report all income: This means every source of income, even if you don't get a W-2 back from an employer, or a 1099 form from someone else you did work for.
- Failing to check whether you are subject to the alternative minimum tax: If your deductions and taxes are so high as to wipe out much of your tax liability, it's a good chance you may be subject to AMT, a parallel tax system designed to make sure the wealthy pay their fair share. But you don't have to have vast wealth to fall under AMT. More middle income taxpayers are being ensnared by this tax. It's best to check.
- Bad math: Mistakes in figuring your taxable income, tax amount, deductions, capital gains, credits or money you owe or are due as a refund.
- Not filing the right forms: IRS instructions spell out who has to file which form. There are, for example, short and long versions of the 1040. See "Which form should I use" in IRS Publication 17, "Your Federal Income Tax." Supporting documents and schedules must be filed for certain deductions, credits and other items.
- Not filing or calculating self-employment tax. If you are self-employed, in most cases you need to file Schedule SE, "Self-Employment Tax."