7 common tax return blunders to avoid

Although tax laws change every year, you can count on certain things to be timeless. That includes the same common mistakes taxpayers with simple and complex returns make every year. Knowing what those common errors are will help keep you in the clear.

  1. Not reporting all of your income. Employers send Form W-2 to their employers reporting income earned throughout the year, but what if you do freelance photography or business consulting on the side for extra spending money? You may not receive a Form 1099 for that work, but you still have to report the income on your tax return.

    "This type of income is reported on IRS Schedule C as part of your Form 1040," says TaxAct CPA and tax analyst Andrew Oswalt. "DIY solutions like TaxAct make it easy – just answer simple questions about your income and expenses. The program will take care of the calculations and tax forms while helping you get all your deductions to maximize your refund."

  2. Not taking full advantage of IRA contribution limits. Individual Retirement Account (IRA) contributions are one of the few tax benefits you can still take advantage of through the tax filing deadline (April 17, 2018). For tax year 2017, traditional IRA contributions up to $5,500 ($6,500 if you're age 50 or older) are tax-deductible. The same contribution limits apply to Roth IRAs as long as your modified adjusted gross income (AGI) is below $118,000 ($186,000 for joint filers). Incomes above that are subject to a reduced deduction.
  3. Not double checking bank account and routing numbers. Whether you're getting a refund or you owe Uncle Sam, double check account numbers. Just one or two incorrect digits can mean a lost refund or penalties and interest because the IRS didn't receive your payment.
  4. Miskeying SSNs or using unofficial names. Believe it or not, these are one of the most common reasons tax returns are rejected. The IRS verifies Social Security numbers and names with the Social Security Administration when processing returns. If the numbers don’t match up, the return is flagged and potentially rejected. Importing last year's tax return information helps avoid these type of errors, but always double check that the numbers and names exactly match Social Security cards. If you realize you made a mistake on your return after you file, you can correct that mistake by filing an amended return using Form 1040X.
  5. Paying too much to do your taxes. Everything you need to prepare and file your taxes is right at your fingertips. Whether you file on a computer, tablet or smartphone, you can affordably and accurately file your federal return using one of TaxAct’s filing solutions.
  6. Not e-filing. Electronic filing is the fastest, most accurate way to submit your tax return to the IRS. Advanced encryption and transmission methods keep your information secure. Typically, the IRS typically processes returns e-filed during the last 48 hours within minutes, which means you'll have your refund sooner. E-filing also allows you to receive email and text notifications as soon as your return is processed.
  7. Procrastinating. Rushing leads to errors. Chances are you won't regret taking a little extra time and care completing one of the most important personal finance tasks you do each year. Reduce your stress and being the filing process once you receive all your tax documents.

Start your tax return as soon as possible. You may need to request information from your employer or financial institution if you don’t receive the documents you need. If you experienced a few life changes throughout the year, you may need a bit more time to claim additional deductions and credits. If you owe taxes, you can schedule an electronic payment for any time before the filing deadline to avoid paying penalties and interest.

For more tax tips, check out the TaxAct blog or start your return with TaxAct today.

February 2018
S M T W T F S
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28

Upcoming Tax Dates

February 10 — Social security, Medicare, and withheld income tax
File Form 941 for the fourth quarter of 2017. This due date applies only if you deposited the tax for the quarter timely, properly, and in full.

February 10 — Certain small employers
File Form 944 to report social security and Medicare taxes and withheld income tax for 2017. This due date applies only if you deposited the tax for the year timely, properly, and in full.

February 10 — Farm employers
File Form 943 to report social security and Medicare taxes and withheld income tax for 2017. This due date applies only if you deposited the tax for the year timely, properly, and in full.

February 10 — Federal unemployment tax
File Form 940 for 2017. This due date applies only if you deposited the tax for the year timely, properly, and in full.

February 10 — Employees who work for tips
If you received $20 or more in tips during January, report them to your employer Details

February 15 — All businesses
Give annual information statements to recipients of certain payments you made during 2017 Details

February 15 — Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in January.

February 15 — All employers
Begin withholding income tax from the pay of any employee who claimed exemption from withholding in 2017, but did not give you Form W4 to continue the exemption this year.

February 15 — Individuals
If you claimed exemption from income tax withholding last year on the Form W-4, you must file a new Form W-04 by this date to continue your exemption for another year Details

February 19 — Everyone
Federal Holiday (Washington's Birthday) Details

February 28 — All businesses
File information returns (for example, Forms 1099) for certain payments you made during 2017.

February 28 — Payers of gambling winnings.
File Form 1096 along with Copy A of all the Forms W2G you issued for 2017. If you file Forms W2G electronically, your due date for filing them with the IRS will be extended to 03-31. The due date for giving the recipient these forms remains 01-31.

February 28 — All employers
File Form W3, Transmittal of Wage and Tax Statements, along with Copy A of all the Forms W2 you issued for 2017. If you file Forms W2 electronically, your due date for filing them with the SSA will be extended to 03-31. The due date for giving the recipient these forms remains 01-31.

February 28 — Large food and beverage establishment employers
File Form 8027, Employer's Annual Information Return of Tip Income and Allocated Tips. Use Form 8027T, Transmittal of Employer's Annual Information Return of Tip Income and Allocated Tips, to summarize and transmit Forms 8027 if you have more than one establishment. If you file Forms 8027 electronically, your due date for filing them with the IRS will be extended to 03-31.

View More Tax Dates