Putting a Hole in Your Lifestyle – Which Tax Mistakes Can Cost You Dearly in 2020

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The United States is not the most expensive nation to pay taxes in, contrary to what citizens may believe, but the IRS is certainly very aggressive about collecting the taxes that are owed to them. You could be living a rich and lavish lifestyle one day, and getting a levy notice from the IRS in your mail the next! To avoid tax mistakes from putting holes in your lifestyle, and bank account, here are a few common mistakes to mull over with your accountant.

Putting in the Wrong Social Security Number

It may seem like the most improbable mistake ever, but it isn’t so at all apparently. The IRS finds thousands of tax returns every year where the provided social security number doesn’t match. This is a particularly common problem seen on returns where the person has claimed multiple dependents.

Given the fact that dependents cannot be claimed anymore without providing their verifiable social security numbers, this common mistake often lands a lot of Americans in trouble every year. Before submitting returns, ensure that all the social security numbers are correct and complete.

Misspellings

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If your name is John Smith, and you file as Jon Smith, that’s a mistake and one that is far too common, according to the IRS. It’s only human to err, but missing that “h” can render your entire filing obsolete. You will likely have to resubmit everything, which can be a real pain to deal with.

Omitting Income

Whether you managed to broker an unexpected real estate deal off the books, or got in a good few thousands from a part time job on the side, the IRS expects to know about it all, add it all and then charge taxes on it all. You are wrong if you think that the IRS won’t find out about your remote job or some one-time job, and you don’t want to find yourself under the lawsuit as a criminal.

Even if you are getting pay in cash, they could find ways to discover a possible avoid of paying taxes, and our advice is to never try to avoid any income. Failing to meet those expectations of Uncle Sam can land you in serious trouble. If the IRS finds out that you have not claimed all your income and filed a tax return based on the total, the consequences can range from an audit to a levy.

In case you are wondering what is a levy, then know that after sending a notice of levy, the government will be capable of ceasing your assets, selling them off as necessary, and settling the money you owe to them, including penalties for failing to claim all incomes and paying dues on time! Don’t wait around for the 1099/W2 forms to report your side incomes because they are not mandatory for the IRS to send before sending a notice of levy. For more information visit this website.

Avoid Mailing Your Returns

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Make no mistake, the IRS doesn’t call you and it will only use traditional US mail to contact the taxpayer. If a caller or emailer claims to be someone from the IRS, it’s just a scammer trying to cheat you. However, sending your tax files via traditional mail may not be the best idea for you. E-file your tax returns with the help of a tax consultant, or even on your own if you can, because mailed filings can get lost, damaged or even ignored, but e-filings leave you with sufficient proof of the fact that you really did file the return properly, and on time.

The more money you have, the more careful you should be while filing your taxes, but that doesn’t mean smaller tax defaulters are let off the hook either. If you do not want your lifestyle to be ruined just because you made a few tax filing mistakes, be careful with the little details.

Choosing a Wrong Status

When you are filing the taxes, it is necessary to select the correct status. You can choose between the head of the household, a widow with a child, single, and married. Also, you can choose from two married statuses that depend on are you filling the taxes separately or joined. The correct answer can significantly improve the tax return for people who are living in a marriage, thus selecting the right answer is crucial for a higher amount of money in return. Also, married people must know that the tax return will be slightly increased in case if you fill the Filing Separately option.

Missing the Deadline

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While it may sound ridiculous, being late in providing all-important tax files is one of the worst mistakes. If you own a business, you will have to be aware that your files are not sent by the last minute of the deadline. Also, in case that you accidentally missed some file or penalty in your tax report, you won’t have to pay any additional penalties if you paid most of your taxes, or owe the amount which is less than 1000 dollars.

Do not Miss Credits and Deductions

While it might seem too complicated, you can learn how to fill your taxes all by yourself, but the first and most important thing that you have to be aware of is to never miss anything from the tax report.

According to some researches, 20 percent of people will avoid about 500 dollars of tax returns, which is more than a billion dollars every year when you look at the scale of the whole country. You shouldn’t miss adding various deductions, like school supplies, medical, credits, possible damages from heavy weather, or some emergency.

Save Your Tax Reports

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It is necessary to keep all the important documents that are related to your tax payment and return. Also, remember that even if you don’t get the file from your employer, the IRS will, and you might find yourself in problems since you are missing a file in your tax report. This could lead to penalties and reduced return of your money.

Extensions are Related to Submission

Another common mistake from many people is that they don’t understand the real purpose of extensions, which is only related to the time required for submission of the tax report. However, you will still be obliged to pay your taxes before the deadline.

Always Look for Help When you are Filing Taxes

The process of filling all necessary documents for a tax report is highly complex, and it requires time and patience to be completely correct. Even if you have a lot of experience with filing your taxes, it is recommended to hire some experts to check it before submission. While professional accountants could require high compensation for what they do, many volunteer organizations would help people with lower income for free.

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