Tax Mistakes That Could Cost You Thousands
Taxpayers who are used to getting a refund every year can still be in danger of losing thousands of dollars. One mistake is all it takes to delay your refund and even turn your annual filing into a penalty.
This all can be avoided IF you learn what not to do in terms of knowing which mistakes to avoid. Believe it or not, small mistakes like the ones listed below are common—they can also cost you a great deal of money if they are not addressed and/or resolved quickly.
When preparing your next annual filing, take these following things into consideration before sending it off to the IRS. You never know, it might save you money!
- Signing Your Tax Return
This is one of the most overlooked steps in a tax filing. Everyone often becomes so enamored with the preparation process that signing off on all of that work can easily be neglected. It is important to understand that without a signature from the preparer and the taxpayer, all of that hard work was for nothing. Furthermore, it delays the tax filing process that may very well induce late penalties and interest.
- Exaggerating Charitable Contributions
Most non-profit institutions will issue an annual tax receipt to donors for cash contributions. For non-cash contributions, a dollar amount must be added. For example, those who donate to a second-hand store like The Salvation Army or Goodwill will have to give an honest estimation of the present value of the contribution. Giving away a used car needs to have some kind of documentation like a Blue Book value that matches the amount you claimed on your taxes.
This is a tricky area here since the present value of the donation(s)can be difficult to track, so the best approach here is to be as honest as possible. If you have an unusually high charitable donation claim, meaning the dollar amount between what you’ve given and your net annual earnings are close, this might serve as a red flag to the Internal Revenue Service (IRS) for a possible audit.
- The Home Office Deduction
These days, getting a home office deduction is almost as common as claiming a standard deduction. Because of this, the IRS is getting stricter on who can claim these credits. This year, the IRS will not allow a taxpayer to claim the home office deduction if his or her business suffered a loss.
So in order to claim this deduction, your home business needs to be successful to some degree. On the other hand, if you are operating a relatively successful business from home and for some reason are not claiming the home office deduction, you could be missing out on a significant amount of money.
- Choosing the Wrong Tax Preparer
An easier way to potentially lose thousands of dollars is to choose the wrong tax preparer. Anyone can file a tax return. In fact, you can file your own, but why would you when there are experts who are well informed with the United States tax laws and can do a better job at properly filing your annual taxes?
Success Tax Relief is a tax resolution company that has over 60 years of experience helping taxpayers come to a reasonable compromise with the IRS regarding any tax debt. View our full scope of services here. To schedule a consultation with us, contact us through our online form or call us direct at 877-825-1179.