7 common tax return blunders to avoid
( BPT ) - Although tax laws change every year , you can count on certain things to be timeless . That includes the same common mistakes taxpayers with simple and complex returns make every year . Knowing what those common errors are will help keep you in the clear .
1 . Not reporting all of your income . Employers send Form W-2s , but what if you do freelance photography or consulting for extra spending money ? You may not receive a Form 1099 for that work but you still have to report the income on your tax return .
" This type of income is reported on IRS Schedule C as part of your Form 1040 ," says TaxACT spokesperson Jessi Dolmage . " DIY solutions like TaxACT make it easy - just answer simple questions about your income and expenses . The program will take care of the calculations and tax forms while helping you get all your deductions to maximize your refund ."
2 . Not taking full advantage of IRA contribution limits . IRA contributions are one of the few tax benefits you can still take advantage of through April 15 . For tax year 2014 , traditional IRA ( Individual Retirement Account ) contributions up to $ 5,500 ($ 6,500 if you ' re age 50 or older ) are tax-deductible . The same contribution limits apply to Roth IRAs as long as your modified adjusted gross income is below $ 114,000 ($ 181,000 for joint filers ). Incomes above that are subject to a reduced deduction .
3 . Not double checking bank account and routing numbers . Whether you ' re getting a refund or you owe Uncle Sam , double check account numbers . Just one or two incorrect digits can mean a lost refund or penalties and interest because the IRS didn ' t receive your payment .
4 . Mistyping SSNs or using unofficial names . Believe it or not , these are one of the most common reasons tax returns are rejected . The IRS verifies Social Security numbers and names with the Social Security Administration when processing returns . Importing last year ' s tax return information helps , but always double check that the numbers and names exactly match Social Security cards .
5 . Paying too much to do your taxes . Everything you need to prepare and file your taxes affordably , and even free , is right at your fingertips . Whether you file on a computer , tablet or smartphone , all taxpayers can file federal returns free with TaxACT Free Federal Edition . Unlike other free solutions , TaxACT includes all e-fileable IRS forms and schedules for complex returns - no restrictions .
6 . Not e-filing . Electronic filing is the fastest , most accurate way to file your tax return . Advanced encryption and transmission methods keep your information secure . The IRS typically processes e-filed returns within 48 hours , typically within minutes , which means you ' ll have your refund sooner . E-filing also allows you to receive email and text notification as soon as your return is processed .
6 . Procrastinating . Rushing leads to errors . Chances are you won ' t regret taking a little extra care on your income taxes , one of the most important personal finance tasks you do each year .
Start your tax return as soon as possible . You may need to request information from your employer or financial institution . If you experienced life changes , you may need a bit more time to claim additional deductions and credits . Even if you owe taxes , you can still file now and schedule electronic payment any time before April 15 .
Regardless of when you file , do it by April 15 or risk paying penalties and interest . Get more tax tips at www . irs . gov and go to www . taxact . com to file free with TaxACT Free Federal Edition .