It’s important to know the top reporting mistakes taxpayers make to prevent raising an IRS red flag. Take a look:
Failing to report all of your income: It’s easy to remember to report income made from your place of employment, but it’s important to remember other sources of taxable income, such as unemployment benefits, gambling winnings, investment accounts, and canceled debt.
Claiming the wrong or too many deductions: There are dozens of deductions taxpayers can take advantage of to reduce their tax liability. However, claiming deductions that you’re not eligible for, or too many, can result in an IRS audit, penalties, fees, and even jail time if it was intentional or fraudulent.
Not filing on time or failing to file: Not filing on time or failing to file altogether can result in a failure to file fee. If you’re running out of time, you can always file for an extension. However, it’s important to remember that even though you applied for an extension to file, you still need to pay your taxes by the tax deadline, which is usually April 15.
Math errors: There is a lot of math involved when it comes to filling out your individual tax return. This can make it easy to make a careless mistake, which can result in the IRS reviewing your tax return. Make sure you double-check each number to ensure it’s correct.
Incorrect or missing information: As you fill out your federal tax return, make sure you fill in every single box, or else the IRS won’t be able to process your return. Additionally, make sure all of your information is correct. This means writing legibly, not rounding numbers, and keying in the correct information from your 1099 and W2 forms.
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