Filing your taxes for the first time is an incredibly stressful and cumbersome rite of passage for nearly everyone. It can be draining – even if you’re good at math and don’t balk at the numbers. Possessing a significant facility with arithmetic doesn’t really matter though. There are a lot of tiny details you need to be aware of, and neglecting them can be of consequence. The following are a few of the common mistakes and challenges you need to be mindful of as you prepare your tax file.
More Than Numbers
Because you are so focused on getting the math right, you might be tempted to bypass the words in the document. This can result in misspelled names, which is a problem since the name of the taxpayer, or the spouse, won’t necessarily match up with the tax identification number or the social security number. This is a common problem, especially for new wives or recent divorcees. Once your name changes, you need to contact the social security administration of any changes, or else you won’t be able to file a joint tax return, or a regular one if you are newly single. Either way, be sure to get the name on the form right: be mindful of misspellings, and ensure that you use the right name on the application – whether you recently changed it or not.
The biggest challenge for those filing their taxes for the first time is simply keeping up with the math. Which is why errors are incredibly common on tax returns. This can cause you to miss out on a tax refund or worse, result in you owing more than you thought. As the experts over at Silver Tax Group note, in cases such as this, IRS examiners are all too happy to find a discrepancy and let you know about it. It’s best not to give them that chance by being as accurate and diligent as possible when filing your taxes.
Losing Your Tax Refund
Speaking of numbers, you need to be sure that you are adding the correct numbers for your bank account when filling out the form. Sure, getting your tax refund via direct deposit makes life a lot easier, and you will also get a hold of your money much faster. However, it’s usually difficult for first-timers to keep on track of all their paperwork, and things easily get lost in the shuffle. Avoid this by going over every single detail thoroughly. Otherwise, you risk losing your tax refund altogether.
If you donated money to a group or organization, then you qualify for valuable tax deductions. Be sure to compile a list of any donation you make, and follow the donation tax rules. Of course, this only counts if you give to an organization with tax-exempt status to the IRS. Calculating other gifts you have given will not qualify. Furthermore, you will run the risk of raising some eyebrows if this section isn’t handled properly.
Just like clockwork, people have their annual freak out regarding tax season. Even if it’s your first time filing, don’t be one of them. By doing your part to put together a strong file, avoiding errors, and reaching out to the experts for advice when necessary, you will have avoided all the headaches associated with taxes.