Taxpayers nationwide prepare their financial documents to file their tax returns as the tax season approaches. While everyone wants to get their refund as soon as possible, it’s important to take the necessary steps to prepare your taxes accurately and avoid common errors that could lead to penalties, fines, and other unwanted consequences.
This blog will highlight some of the most common mistakes to avoid when preparing your taxes. We’ll also share tips on avoiding these mistakes and provide insight into how working with a professional accountant can make the process smooth.
How Far Back Can the IRS Audit?
The IRS typically has the authority to audit your tax returns for up to three years after you file them. However, in some instances, this period can be extended to six years or even indefinitely. The three-year period is known as the statute of limitations for tax assessments, and it begins on the date the tax returns are filed. If the IRS finds substantial errors or fraud in your tax returns, the statute of limitations can be extended to six years. Additionally, the IRS can audit you indefinitely if you fail to file your tax returns. It’s crucial to keep accurate records of your tax returns and seek professional help in case of an audit. Working with an experienced tax accountant can help you navigate an audit and avoid potential penalties, fines, and other unwanted consequences.
Filing Your Taxes Late
One of the most common mistakes taxpayers make is filing their taxes late. Failing to file your taxes on time can result in penalties and interest charges that can add up quickly, making your tax bill even higher. To avoid late filing penalties, it’s important to know the tax filing deadlines and act accordingly.
It’s also important to note that the earlier you file your taxes, the earlier you’ll receive your refund. The IRS processes tax returns on a first-come, first-served basis, so the earlier you file, the sooner you’ll receive your refund.
Filing the Wrong Forms
Another common mistake is filing the wrong tax forms. There are numerous tax forms for various types of income, deductions, and credits. Selecting the correct forms that apply to your specific tax situation is important. One of the easiest ways to avoid this mistake is to work with an experienced accountant. They can help you identify the proper tax forms and ensure your tax returns are accurate and complete.
Not Double-Checking Your Data
Errors in your tax returns can lead to penalties, audits, and other negative consequences. Data entry errors like typos, incorrect Social Security numbers, or wrong dates can cause your tax returns to be rejected, leading to delays in processing your refund. To avoid this mistake, double-check your tax returns and ensure all the data is accurate before submitting them.
Claiming Too Many Deductions
Claiming too many deductions is a common mistake that can trigger an IRS audit. Deductions, including charitable contributions, home office deductions, or business expenses, can reduce your tax bill. However, if the deductions you claim exceed what’s commonly accepted for your income level, it may raise a red flag and lead to an audit. Be sure to work with an accountant to determine which deductions are acceptable for your specific tax situation.
Not Keeping Accurate Records
Keeping accurate financial records is critical to preparing accurate tax returns. Failing to keep track of receipts, invoices, bank statements, or other financial documents can lead to mistakes, missed deductions, and inaccurate tax returns. Make sure you keep your financial records organized and up to date. This will not only help you prepare your tax returns with ease, but it can also help you identify potential improvements to your financial situation.
Working Alone or With the Wrong Professional
Another common mistake is not seeking professional help when preparing your taxes. While it may seem cost-effective to prepare your tax returns by yourself, this can lead to errors that can be costly in the long run. Working with an experienced accountant can help you avoid common mistakes, ensure your tax returns are accurate and complete, and save you time, money, and stress. Choosing a professional with experience in your tax situation is essential. At Nine Line Accounting, our team has years of experience working with clients of various industries and complexities, and we pride ourselves on providing personalized tax preparation services.
In conclusion, preparing your taxes can be a stressful and daunting task. However, by avoiding these common mistakes and working with a professional accounting firm like Nine Line Accounting, you can ensure that your tax returns are accurate, complete, and timely. Contact our team for personalized, reliable tax preparation services tailored to your tax situation. Contact us today to schedule your consultation.