Written by: Mike Eklund and Chad Smith
On this episode, we’re getting you ready for tax time. We’ve been helping clients review their taxes for many years and have devised patterns of the most missed items to save money on your return. We’ve compiled these ideas in this show as we cover the top ten tax return filing mistakes. Remember, the IRS will never send you money that you missed on your tax return. Make sure you listen to this episode to avoid these common tax return mistakes.
What can you do to become more organized with your tax returns?
Many times people make tax return mistakes simply because they are disorganized. They misplace paperwork and often do not have all the data at hand to complete their 1040 correctly. A good annual practice to avoid making costly mistakes on your tax return is to keep a file handy where you can put all of your tax documents for the coming year. That way as you receive documents throughout the year you can just place them into the file and have them ready when it is time to prepare your taxes.
Do you have a checklist to keep track of new tax rules and help to avoid tax return mistakes?
Having a checklist can help you in your quest to become more organized and avoid costly tax return mistakes. Without a checklist, you may forget to enter correct data or double check new tax rule opportunities. A good example of this dealt with the requirement for custodians to keep cost basis on investment accounts that was implemented in 2011-2013. But many investors hold stocks or mutual funds that were acquired before those dates. The original cost could be reported incorrectly if the custodian doesn’t have record of it. Using a detailed checklist, or finding a professional that uses one, will make it more likely you will avoid costly tax return mistakes.
Related: How to Choose Your Tax Withholding
What should small business owners be doing to avoid tax return mistakes?
Are you a small business owner? Do you do any side work that involves a 1099? If so, that means you are. When you begin your small business or even if you simply have a couple of side gigs to bring in extra income, then you need to pay attention to all the rules for filing your 1099 so that you can complete your tax return correctly and save money. Knowing what is taxable income and what isn’t is important and can save you thousands of dollars on your tax return. Listen to this episode to hear about all the ways you can save money by avoiding these tax return mistakes.
Did you know that credits are more important than deductions?
Many people think that finding deductions is the best way to save money on their tax returns, but that’s not the case. Finding relevant tax credits is actually more important than finding deductions. You need to understand all the credits that apply to you and your family to make the most out of your tax return. If you have a college student you may be making a big mistake when filing your tax return. If you want to get the most out of your tax return , you’ll want to listen in.