11 big tax mistakes to avoid
Mistakes are part of life, but try not to make them part of your tax return. One misstep could hold up your tax return — maybe even your refund — for weeks or months, and you might even end up on the hook for interest and penalties. Here are 11 tax mistakes you definitely want to avoid:
- Missing the deadline
Never blow off the April tax filing deadline. If you have to file after the deadline and are worried about what happens when you file taxes late, know that the IRS is usually fine with that. Just request an extension by filing Form 4868 before the April deadline and you can get more time.
The alternative — doing nothing — opens you up to a 5% penalty on the amount due for every month or partial month your return is late. The maximum penalty is 25% of the amount due.
You’ll also owe interest on taxes outstanding after the April deadline, even if you get an extension. And the IRS may hit you with a late-payment penalty, normally 0.5% per month on the outstanding tax not paid by the April deadline. Again, the maximum penalty is 25%.
- Using the wrong Social Security number
The IRS uses Social Security numbers to cross-reference information it receives from you with information it receives about you from your employer, bank or other entities. Transposing a digit in your Social Security number screws that up, which means the IRS could reject your return. So, be sure you enter every Social Security number on your tax return exactly as it appears on the Social Security card.
- Getting your name wrong
This mistake is easy to make if you don’t use your full legal name every day. It creates a problem because your name on any refund check from the IRS will be spelled the way it appears on your tax return, which could raise a flag at your bank. Be sure to spell the names of everyone on your return just as they appear on their Social Security cards, too. If you’ve changed your name, tell the Social Security Administration online or call 800-772-1213. You can also call the IRS at 800-829-1040 to correct the spelling of your name over the phone.
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