As tax season approaches, it’s essential to take a step back and review your finances to ensure you’re maximizing your refund. Unfortunately, many taxpayers make costly mistakes that can result in overpaying taxes or even facing IRS penalties. In this blog post, we’ll outline five common tax mistakes you should avoid to help you keep more money in your pocket this tax season.
- Failing to Report All Income
One of the most common mistakes taxpayers make is failing to report all of their income. Whether you received a 1099-MISC for freelance work or made money from a side gig, you must report all income on your tax return. Failing to do so can result in IRS penalties, including interest on the taxes owed and possible legal action. Be sure to keep track of all income sources and report them accurately to avoid any issues.
- Not Taking Advantage of Tax Credits
Tax credits can significantly reduce the amount of taxes you owe, but many taxpayers fail to take advantage of them. From the Earned Income Tax Credit to the Child Tax Credit, there are numerous tax credits available that can help you keep more money in your pocket. Make sure you research and understand which credits you’re eligible for to avoid missing out on potential savings.
- Incorrectly Claiming Deductions
Deductions can also help lower your tax bill, but it’s crucial to understand which deductions you can claim and how to do so correctly. Common deductions include charitable contributions, home office expenses, and medical expenses, among others. Keep accurate records of your expenses and consult with a tax professional to ensure you’re correctly claiming all eligible deductions.
- Filing Late or Not Filing at All
Failing to file your tax return on time can result in costly penalties and interest on the taxes owed. Additionally, failing to file altogether can lead to more severe consequences, including legal action by the IRS. Make sure you file your tax return on time, even if you’re unable to pay the full amount owed. You can work out a payment plan with the IRS to avoid additional penalties.
- DIY Tax Preparation
While there are numerous software programs and online resources available to help you prepare your taxes, it’s still recommended to consult with a tax professional. A professional can help you navigate complex tax laws and ensure you’re taking advantage of all eligible deductions and credits. They can also help you avoid costly mistakes that could result in IRS penalties.
In conclusion, avoiding these common tax mistakes can help you maximize your refund and keep more money in your pocket. If you’re unsure about your tax situation or need help preparing your tax return, contact Jose’s Tax Service. Our team of experienced tax professionals can help you navigate the complex tax laws and ensure you’re taking advantage of all eligible deductions and credits.