Filing taxes can be complex, and even the most well-intentioned taxpayers can make mistakes that may lead to tax debt without knowing what is about to occur. Even though some of these may seem obvious, here are ten common IRS mistakes made that result in unexpected tax debt:
1. Filing late or not at all: Missing the tax filing deadline or failing to file can result in penalties, interest, and potential tax debt.
2. Inaccurate personal information: Incorrect Social Security numbers or misspelled names can delay the processing of your return and lead to late filing or payment penalties.
3. Math errors: Double-check your calculations to avoid mistakes that could result in additional taxes, penalties, and interest.
4. Incorrectly reporting income: Failing to report all income, including cash payments, can result in underpaid taxes and potential penalties.
5. Claiming ineligible deductions or credits: Ensure you qualify for all deductions and credits, as incorrect claims can lead to additional taxes owed.
6. Incorrectly calculating estimated tax payments: If you're self-employed or have other income not subject to withholding, ensure your estimated tax payments are accurate to avoid underpayment penalties.
7. Neglecting to report investments or capital gains: Failing to report investment income or capital gains can result in additional taxes, penalties, and interest.
8. Not keeping accurate records: Maintain organized and accurate financial records to support your tax return and avoid potential audits.
9. Filing under the wrong status: Choosing the incorrect filing status can lead to overpaid or underpaid taxes and potential penalties.
10. Failing to stay informed of tax law changes: Stay current on tax law changes to ensure you're taking advantage of available deductions and credits and avoiding potential penalties.
Please Note: Failure to meet tax filing deadlines can result in penalties, interest, or other consequences. Avoiding these common mistakes will help ensure a smooth tax filing experience and minimize the risk of tax debt.
Please note that the information provided in this Dayes Tax Newsfeed is for general informational purposes only and is not legal advice. It does not create an attorney-client relationship with Dayes Law Firm or any attorney at the firm or provide a substitute for professional legal counsel. Until we have been formally engaged through a signed agreement and retainer, we are not your attorneys and cannot provide specific legal advice tailored to your circumstances.
If you need the advice of a tax attorney, please contact Norris Lozano, Senior Tax Attorney, at norris.lozano@dayeslawfirm.com to schedule a consultation or seek guidance.
