Preparing to file your federal tax return? Review some common mistakes people make and how you can avoid them this tax season.
Making a mistake on your tax return can slow down its processing and even delay your refund. If the IRS spots any errors, they may reject your return, requiring you to correct the issue and resubmit it promptly. Many common tax return mistakes are simple human error, unrelated to the complex tax laws provided.
By paying a bit more attention and double checking your information, you can make tax season smoother and error free.
Let’s review some common mistakes and ways to resolve them.
Don’t miss out on tax deductions and credits…
There are various tax deductions and credits, such as the Earned Income Tax Credit, that can help lower your tax liability and even increase your tax refund. However, if you overlook a specific tax break on your return, the IRS won’t notify you what may have been missed. Be diligent in reviewing all deductions and credits.
Hiring a tax preparer will further help in finding the best deductions and credits for you.
Providing incorrect Social Security information…
A recurring error is entering your Social Security Numbers (SSNs) incorrectly. If your SSNs on your tax return are wrong, the IRS will decline it. Many tax benefits available, like the Child Tax Credit, education credits, or Child and Dependent Care Credit, depend on accurate SSNs. Make sure when filing your return you double check all SSNs for typos or inconsistencies.
Names do not match up with Social Security cards…
Surprisingly, one of the main reasons the IRS will reject tax returns is due to a name mismatch. While misspellings can occur, the primary issue is when a dependent child’s name doesn’t match the name on their Social Security cards. The IRS database is synchronized with the Social Security Administration (SSA). Therefore, if the IRS system can’t find a specific name on your tax return in the SSA’s database, it will outright reject the return. Although this is an easy fix, your return will not be processed until the correction is made.
Not entering your income…
If you accidentally omit your exact income on your tax return, the IRS will notify you. They track income deposited into your bank and any investment accounts using your SSN and tax forms. If a mistake is found, you might owe penalties and interest on that unreported income. Therefore, it is wise to double check that all your income is reported properly before filing your return.
Choosing an incorrect filing status…
The IRS determines many tax deduction amounts, including the standard deduction, based on filing status. Therefore, it’s crucial to meet the strict criteria for each status. Your options include:
Single
Head of household
Married filing jointly
Married filing separately
Qualifying widow or widower
Choosing the wrong filing status will result in the IRS denying your return. Sometimes, you may qualify for more than one status. In such cases, select the one that offers a larger tax refund or a lower tax payment.
Work with your tax preparer to make sure you choose the correct status.
One of the most frequent mistakes on tax returns is incorrect calculations. Errors in your math or transferring numbers between forms can lead to an immediate correction notice from the IRS. These math mistakes might also reduce your tax refund or cause you to owe more than necessary.
Your tax preparer should be able to spot these errors for you, but make sure you are double checking your work for a better experience with your appointment.
Failing to meet the April tax return deadline…
The final tax return mistake is easy to avoid: ensure you file your tax return on time. If you need more time, submit Form 4868 by April 15 to get an automatic six month extension.
Keep in mind that you still need to pay any taxes owed by the Tax Day deadline (usually April 15) to avoid late filing penalties, interest, and fees. If you can’t afford to pay the full amount, the IRS offers payment plans.
Check with your preparer for more information.
Incorrect account numbers or routing information for direct deposits…
If you opt for a direct deposit of your refund into one or multiple banking accounts, make sure you double check the bank account numbers you enter. Even a single incorrect digit can lead to several extra weeks of waiting for your refund, someone else receiving your tax refund, or your refund being returned to the IRS.
The key to a quick and efficient tax year is to work with your tax preparer to help resolve any mistakes. Double check your information and verify all data to have a successful tax season.
This blog post serves as informational content and does not constitute legal or financial advice.
If you’ve been losing sleep over the possibility of a tax audit, put your mind at ease. Here are five reasons why you might want to stop worrying about it.
A Tax Audit is Not Always Trouble
An audit doesn’t automatically mean you’re in trouble. Sometimes, it’s just a random selection. Even if there’s a discrepancy in your return, like a math error or typo, the IRS may simply ask for additional documents or an amended return.
Most tax audits focus on returns filed within the last three years. Rarely do they go back more than six years, so you don’t need to worry about ancient tax seasons.
Reduce Your Risk
Certain items on your tax return can attract the IRS’s attention. Just be diligent and accurate in your data collection which can reduce your chances of an audit.
Stay Calm
If the IRS does audit you, don’t panic. It’s a specific process, and you can work through it with the right documentation. This is why it is important to work with a certified tax preparer or better yet, an Enrolled Agent. An Enrolled Agent (EA) is an individual who has earned the privilege of representing taxpayers before the Internal Revenue Service (IRS).
For taxpayers in the middle or lower income range and have relatively uncomplicated taxes, the likelihood of an IRS audit is quite minimal. For example: between the years of 2010 to 2019, the IRS audited approximately 0.25% of individual tax returns on record.
The IRS usually focuses their audits on high income earners. In 2019, a little more than 2% of Americans earning more than $5 million per year had their taxes audited. That’s down from 16% in 2010. “For taxpayers earning over $1 million, there has been substantial reduction in audit rates, but they are still audited more frequently than taxpayers earning below $200,000,” said Alex Muresianu, a policy analyst at the Tax Foundation.
Learn how to avoid the possibility of a tax audit…
Be thorough and accurate when reporting all of your expenses
Itemizing tax deductions with accuracy is essential
Provide appropriate details when required
File your taxes on time, as much as possible
Avoid amending returns. If you must, proceed with caution
Check your math. Now, check it again
Avoid using round numbers
Do not make too many deductions
Although there is no guarantee that the IRS won’t audit you, knowing some specific facts about tax audits during the filing process can help alleviate your concerns.
Now is the time to perform a mid-year review of your business activities. Staying on top of these five steps will benefit you throughout the year while saving time, money, and making tax time a breeze.
* Lower taxable income with these deductions
After assessing your cash flow, explore reinvesting within your business. Whether it’s buying new equipment or expanding your advertising efforts, these investments often come with tax advantages. As part of your business, you can typically deduct equipment and advertising costs on your tax returns.
Review this list of small business deductions you can take to help your business grow and lower taxable income:
* Managing personal and business finances separately
As your business income becomes consistent, consider opening a dedicated bank account or credit card for business use. This simplifies tracking income and expenses and provides a central reference point for tax filing.
Separating business and personal finances is a smart move. To get started:
Open Up Separate Accounts: Set up distinct bank accounts, with one for business transactions and the other for personal use. This will ensure a clear separation of these accounts.
Track Your Transactions: Record all your business related income and expenses separately. Use your favorite accounting software or a spreadsheet to stay organized.
Avoid Mixing Business and Personal Funds: Never use your business funds for personal expenses, and vice versa. Keep them separate for easier management.
Remember, this practice simplifies tax reporting during tax season and protects your financial well being!
* Organize receipts for expenses
As a business owner, working to maintain detailed records of your transactions is crucial to your tax time success. Here’s why keeping your business receipts organized matters:
Expense Management: Receipts will help you track your expenses effectively, ensuring you manage costs efficiently for all of your business needs.
Accounting and Budgeting: This data will provide a clear record of business expenses and all income, which can be used in financial statements and other accounting records.
Accurate Financial Records: Receipts serve as documented proof of financial transactions, essential for bookkeeping, accounting, and tax purposes.
Legal and Tax Compliance: Having receipts ensures compliance with tax laws and protects both buyers and sellers by injecting transparency into transactions.
So, snap those receipts and keep them organized during this mid year tax review — it’s more than just storage; it’s about financial health! If you haven’t done so yet, there’s still time to catch up!
What are the benefits of quarterly estimated tax payments and how should you prepare for them…
Avoid a Big Tax Bill: By paying quarterly, you are able to spread your tax liability throughout the year. This will prevent a hefty tax bill when it comes time to file your annual return. It’s like making payments in installments rather than all at once.
Penalty Prevention: You should stay current with your taxes. If you underpay or miss payments, the IRS may impose penalties. Quarterly payments will help you stay on track and avoid any surprises.
Estimation Process:
Gather Information: Estimate your taxable income, including any self-employment income, interest, dividends, and other earnings.
Deductions and Credits: Consider deductions (like business expenses) and tax credits (such as child tax credit or education credits).
Last Year’s Return: Use your previous year’s tax return as a guide.
Calculate Tax: Determine your income tax and self-employment tax (if applicable).
Remember, quarterly estimated tax payments keeps you in good standing with the IRS and ensures a smoother tax season.
As a business owner, maintaining meticulous records of your income and expenses is crucial. Here’s why:
Clear View of Cash Flow: Detailed records provide insight into your business’s financial health. You can track cash flow, identify patterns, and make informed decisions.
Maximizing Deductions: Good records help you identify eligible deductions. By keeping track of expenses, you can maximize deductions and reduce your taxable income.
Estimating Quarterly Tax Payments: Accurate records allow you to estimate quarterly tax payments effectively. Staying current with taxes ensures smooth financial management.
Whether you use software or spreadsheets, organized records empower your business!
Take the time to tackle these steps to minimize any tax liabilities and stay on top of your finances.
This blog post serves as informational content and does not constitute legal or financial advice.
The Internal Revenue Service (IRS) has announced the agenda for the 2024 Nationwide Tax Forum, which will feature 45 seminars aimed at enhancing the skills of tax professionals. This year’s forum, which includes contributions from the IRS and leading tax associations, will cover a broad spectrum of topics designed to help tax professionals better serve their clients.
Diverse Seminar Topics and Keynotes
The 2024 agenda will encompass subjects such as tax law updates, managing client examinations, digital assets, the Secure Act 2.0, the Employee Retention Credit, and clean energy credits. Highlighting the forum will be a keynote address and plenary session where IRS leadership will discuss ongoing efforts to improve service and transform enforcement and compliance activities.
Focus on Cybersecurity and Fraud Prevention
In addition to regular tax law updates and ethics courses, this year’s forum will feature two panel discussions on cybersecurity: “Tax Pros and Security Real-Life Threats and Steps to Protect Your Business” and “IRS Security Summit and the Written Information Security Plan.”
Experts from the Pell Center will also present a session titled “Cybersecurity for Tax Professionals,” and three more seminars will focus on combating abusive scams, schemes, and fraud.
Special Events and Sessions
Apart from the regular seminars, attendees can join special events such as:
Practice Management
Scams and Schemes Panel Discussion with CERCA
National Taxpayer Advocate Town Hall
Beneficial Ownership Information Reporting
Bilingual Offerings and Continuing Education Credits
Six of the forum’s most popular topics will be presented in both English and Spanish. Attendees can earn up to 19 continuing education credits by participating in one of the five forums held on the dates and locations listed below.
IRS Nationwide Tax Forum Dates and Locations
The forums will take place in:
Chicago, IL: July 9-11 (Standard rate deadline: June 25)
Orlando, FL: July 30-August 1 (Standard rate deadline: July 16)
Baltimore, MD: August 13-15 (Standard rate deadline: July 30)
Dallas, TX: August 20-22 (Standard rate deadline: August 6)
San Diego, CA: September 10-12 (Standard rate deadline: August 27)
Registration and Early Bird Discount
Tax professionals are encouraged to register by 5 p.m. ET on June 17 to benefit from the early bird rate of $255 per person, a savings of $54 off the standard rate and $135 off the on-site registration rate. After 5 p.m. ET on June 17, the standard pricing of $309 will apply until two weeks before the start of each forum (see above).
Association Discounts
Members of the American Bar Association (ABA), American Institute of Certified Public Accountants (AICPA), National Association of Enrolled Agents (NAEA), National Association of Tax Professionals (NATP), National Society of Accountants (NSA), and National Society of Tax Professionals (NSTP) can save an additional $10 off the early bird rate if they register by June 17.
For detailed information and registration, visit IRStaxforum.com.
Consistency and reliability are paramount in the world of tax and accounting software—and with the publication of the 2024 CPA Practice Advisor Readers’ Choice Awards results, Drake Software has good reason to celebrate. According to the CPA Practice Advisor, “In keeping with recent years, Drake Software continues to inspire the users of its tax prep, planning, management, and other systems to vote in high numbers.”
After maintaining a winning streak in various categories for an impressive 18 consecutive years, the following solutions from Drake Software were voted #1 in 2024:
Drake Tax® – Tax Preparation Software
Drake Tax® Planner™ – Tax Planning Systems
Drake Accounting® – 1099/W-2 Preparation
Drake Portals™ – Client Portals for Firms
Drake Documents® – Document Management and Storage
SiteDart Hosting™ – Website builders
DrakeCPE® – CPE provider
Drake Hosted™, powered by Rightworks™ – ASP/Hosted Solution Providers
This impressive sweep across multiple categories underscores Drake Software’s commitment to excellence and innovation in both the flagship Drake Tax product and its ecosystem of integrated tax preparation solutions.
Curious to experience Drake Tax in action? Sign up for a free trial today and discover firsthand why countless tax professionals rely on Drake Software for their tax and accounting needs.
Filing deadlines often change for taxpayers in regions that experience natural disasters. When these extreme weather events hit, the IRS frequently provides tax due date extensions. The relaxed due dates are intended to give more time to the individuals and businesses impacted by the natural disaster to prioritize relief and recovery instead of drawing their focus to a filing deadline. Following are notices for the upcoming tax season. We encourage you to visit the Tax Relief in Disaster Situationspage on the IRS website for the very latest updates.
Spokane Wildfires
Wildfires burned in Spokane, Washington beginning August, 18 2024. Taxpayers in Spokane County may qualify for a tax filing extension due June 17, 2024 designated by the IRS to encourage disaster relief. The full guidelines on qualifications are available at this IRS Information link.
Fierce weather struck San Diego on January 21, 2024 causing serious damage to individuals and infrastructure. The IRS recently declared that those who qualify (as having their business or property hurt by the disasters) will have until June 17, 2024 to file their taxes.
Michigan Severe Weather: Flooding, Tornadoes, and Storms
Powerful storms rocked Michigan August 24, 2023. FEMA ruled that many counties experienced natural disasters and the IRS will allow them to qualify for a filing extension which now has taxes due June 17, 2024. All counties which qualify are included in this IRS news release link.
Mudslides and Other Extreme Weather in West Virginia
Landslides, mudslides, flooding, and storm damage hit West Virginia counties August 28, 2023. Taxpayers in the region may qualify for extra time filing taxes with a new date of June 17th, 2024 established by the IRS.
Several counties in Maine will experience a tax payment due datechange toJune 17, 2024.This decisions comes in the wake of heavy storms which hit the region December 17, 2023. A list of all areas designated by the IRS under the relief order can be found below.
A tax deadline change toJune 17, 2024 was issued by the IRS to victims of extreme weather occurrences inProvidence County. Citizens and businesses of the county affected by the disasters have been given additional time to get their taxes in order because of the damage caused by the intense weather of September 10, 2023.
The recent severe weather on January 10, 2024 caused widespread damage to taxpayers in Connecticut. To offer relief to those affected in New London County, and the Mogehan and Mashantucket Pequot Tribal Nations, the IRS extended their dues until June 17, 2024.
A recently announced filing deadline for both individuals and business organizations in parts of Tennessee is now in effect. The severe tornadoes prompted the IRS to extend the due date for payments to June 17, 2024. People, households, and entities with addresses inside the area designated by FEMA are automatically able to make use of the extension. They do not need to contact the IRS to become eligible.
55 of 58 counties in California qualify for a 2022 tax season filing extension which is now due on November 16, 2023. This deadline extension originates from strong storms in the region last winter which caused flooding, landslides, and other severe weather phenomena.
The IRS adjusts due dates for certain payments and filing that fall between Oct. 7, 2023 and Oct. 7, 2024. Individuals such as humanitarian workers and businesses whose central place of operation is Israel may be able to receive this relief.
Individuals or businesses residing in Jefferson, Orleans, Plaquemines and St. Bernard parishes may now be able to delay filing returns and paying taxes until Feb, 15, 2024.
Qualifying farmers and ranchers in 49 states, two U.S. Territories, and D.C. who were forced to sell livestock due to drought conditions will have an extended window to replace the livestock and report gains.
Parts of Hawaii have been granted an individual and business return filing extension until February 15th, 2024 to help the victims focus on disaster recovery.
The IRS has announced tax relief packages for regions in the states of Florida, Georgia, and South Carolina to help those affected concentrate on rebuilding after the storm. Tax payments are now pushed back until February 15th, 2024.
We use cookies to optimize our website and our service.
Functional
Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes.The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Tax & Financial Consulting Services