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Common (and Costly) Tax Return Mistakes—and How to Avoid Them

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Common (and Costly) Tax Return Mistakes—and How to Avoid Them

Filing your taxes can be a daunting task, but it’s crucial to get it right to avoid potential headaches (and, of course, penalties). What causes the most common tax return mistakes? Human error. We transpose numbers. We flub the math. We forget about a 1099 and suddenly, we have a problem. Here are a few common mistakes to watch out for when you file your 2023/2024 return and the steps you can take to avoid these issues:

#1. Filing Too Early or Too Late

If you file your taxes too early and miss important elements (like a delayed 1099) you could face an audit or have your return rejected. If you realize your mistake before the IRS does, you can file an amended return with the missing or incorrect information. To prevent this extra work, wait until you have collected all of your tax documents before filing. On the other end of the scale, filing your tax return late can result in penalties and interest. Remember, the deadline for filing individual tax returns this year is April 15, but it may be extended in certain circumstances.

To avoid this issue: Mark the tax filing deadline on your calendar and consider filing early (but not too early) to avoid last-minute stress. Request an extension if needed, but be aware of any additional tax liability.

#2. Missing or Inaccurate Personal Information

One of the most common tax return mistakes taxpayers make is entering incorrect personal information. One little transposed number could cause your return to be delayed or rejected. So, double-check that your name, Social Security number, and other details are accurate. Then, triple-check the information to prevent any delays or issues with your tax return.

To avoid this issue: Use the information from your previous year’s tax return as a reference.

#4. Inaccurate Wage or Income Information

Some taxpayers forget to report all sources of income, such as freelance work, side gigs, or rental income. Failing to report income can lead to penalties and interest.

To avoid this issue: Keep thorough records of all income sources throughout the year. Save your W-2s, 1099s, and other relevant documents in one location so they are easy to find when you prepare your return.

#5. Incorrect Filing Status

It is crucial to choose the correct filing status, as it affects your tax rate and deductions. The five tax filing statuses include Single, Married Filing Jointly, Married Filing Separately, Qualifying Widow(er), and Head of Household—but your status is not about how you feel or self-identify. There are limits to who can claim what status. Selecting the wrong status can lead to errors in your tax liability.

To avoid this issue: Consult a tax professional if your filing status is unclear or has changed. It is important to understand the different filing statuses and choose the one that accurately reflects your situation.

#6. Math Errors

Simple math mistakes can lead to miscalculations, potentially triggering audits or delays in processing your return. Be extra cautious when performing calculations, especially when adding or subtracting figures.

To avoid this issue: Consider using tax preparation software or hiring a tax professional to reduce the risk of math errors.

#7. Incorrectly Calculated Credits or Deductions

Many taxpayers miss out on valuable deductions and credits that could lower their tax liability. Commonly overlooked deductions include student loan interest, medical expenses, and job-related expenses.

To avoid this issue: Research eligible deductions and credits or seek guidance from tax software or a tax professional to maximize your potential savings.

#8. Incorrect Bank Account Information

If you opt for direct deposit on your tax return, make sure you have the correct bank routing number and account number included on your return. If you don’t, your money could get stuck in limbo.

To avoid this issue: Find your account number in Digital Banking by following these steps:

  • Log in to Digital Banking.
  • Select your desired account (such as your Free Community Checking account).
  • Click on the “I” icon next to the heading “Account Information”.
  • Within this section, you will see additional information about the account including your account number, the credit union routing number, and YTD interest/dividends earned (if applicable).
  • Need the routing number for Maps Credit Union? It is 323276388.

#9. Missed Tax Law Changes

Tax laws can undergo changes from year to year, affecting deductions, credits, and other elements of your tax return. Ignoring these changes can lead to missed opportunities for savings or compliance errors.

To avoid this issue: Stay informed about any updates to tax laws for the current tax year. Utilize reliable resources such as the IRS website, tax software updates, or consult with a tax professional to ensure that you are aware of any changes that may impact your tax situation.

#10. Unsigned Forms

After all the work of filing your taxes, it would be a shame to have your return discarded, but an unsigned return isn’t valid. Also, if you are filing jointly, remember that both spouses must sign the joint return. There are, however, exceptions for those filing on behalf of active-duty members of the armed forces or for taxpayers with a valid power of attorney.

To avoid this issue: Before submitting your tax return, double-check to ensure that you’ve signed and dated all necessary forms. If you’re filing electronically, follow the provided instructions for electronic signatures.

Tax season doesn’t have to be stressful. If you are processing your own returns, take your time. You have until April 15, 2024. Also, be sure to take advantage of your Maps member discount on Turbo Tax software and H&R Block tax services. Before you hit, “send” or sign, review your tax return carefully to maximize your deductions and credits while minimizing the risk of errors. By being mindful of these tips, you can navigate the tax filing process with confidence—and, most importantly, reduce the likelihood of encountering these common tax return mistakes.

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