Getting your taxes done is a lot like getting a health checkup. You know you need to do it. Even so, you’re tempted to put it off. However, once your taxes are done–or your health checkup completed–you feel great.
This is the time of year when many Americans are stressing about doing their taxes. This is especially true this year with the new law in effect. No one is quite sure how doing their returns is going to go or if they’re going to get a refund.
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I’ve put together this blog post that offers tips on avoiding common mistakes. I’ve also put together a list of tax brands that can help you get your returns done fast. Some can even help you get them done for free. Hopefully this advice will make it so that doing your taxes this year won’t be painful at all.
Common errors and tax mistakes to avoid
You know what could delay you completing your return or your refund showing up? Making common errors and mistakes. Even smart people make mistakes.
One year we did just that. While filing the FAFSA for our daughters, we swapped their social security numbers by accident. That really slowed down our ability to get financial aid for college that year.
Here are some common errors and mistakes Americans make when filing returns. I’m pointing them out so you can avoid them while getting your taxes done.
Wrong or missing Social Security numbers
Be sure you enter SSNs for yourself and others on your return exactly as they are on the Social Security cards. Believe it or not, the year our first child was born, we almost forgot to include her on our return. Always file for your new baby’s social security number after you give birth. Then don’t forget to include it in the next year’s tax return.
Names wrong or misspelled
Be sure you enter names of all individuals exactly as they are on their Social Security cards. So, for example, if your middle initial appears on your Social Security card, put your middle initial on your return. Conversely, if your entire middle name appears on your Social Security card, include your entire middle name on your return. Make sure every member of your family does the same.
Filing status errors
Choose the right filing status. There are five filing statuses:
- Married Filing Jointly
- Married Filing Separately
- Head of Household
- Qualifying Widow(er) With Dependent Child
See Publication 501, Exemptions, Standard Deduction and Filing Information, to help you choose the right one. E-filing your return will also help you choose the right filing status.
Math mistakes while getting taxes done
If you file a paper return, double-check the math. If you e-file, the software does the math for you.
Errors in figuring credits and deductions
Take your time and read the instructions fully. With the new law, many of the rules have changed.
Wrong bank account numbers
Direct deposit is the fast, easy and safe way to receive your refund. Make sure you enter your bank routing and account numbers correctly.
Forms not signed or dated
An unsigned return is like an unsigned check–it’s invalid. Remember both spouses must sign a joint return.
Electronic signature errors
If you e-file your return, you will sign the return electronically using a Personal Identification Number (PIN). In year’s past you could use the previous year’s PIN if you e-filed last year and remember your PIN. Double check that this option is still available, given the new law.
How to find someone to get your taxes done
Normally when hiring someone I’ll go on personal recommendations or word of mouth. The same is often true when hiring someone to file your return.
Here are some tips on how to choose someone to do your return.
Ask about the preparer’s qualifications
All paid tax preparers are required to have a Preparer Tax Identification Number or PTIN. In addition to making sure they have a PTIN, ask the preparer if they belong to a professional organization and attend continuing education classes.
Check the preparer’s history
Check with the Better Business Bureau to see if the preparer has a questionable history. Look to see if there are any disciplinary actions and for the status of their licenses.
If you’re considering a certified public accountants, check with the state board of accountancy. For attorneys, check with the state bar association. Finally, for enrolled agents, check with the IRS Office of Enrollment.
Ask about service fees
Avoid preparers who base their fee on a percentage of your refund. Also avoid prepares who say they can get larger refunds than others can.
Always make sure any refund due is sent to you or deposited into your bank account. Taxpayers should not deposit their refund into a preparer’s bank account.
Confirm that they will e-file your return
Make sure your preparer offers IRS e-file. Any paid preparer who prepares and files more than 10 returns for clients generally must file the returns electronically.
Make sure the preparer is available
Finding someone who can actually get your return done on time is key. If not, that person can always file an extension for you. Note: if you file an extension, you still need to pay any taxes you owe by April 15.
Provide records and receipts
Good preparers will ask to see your records and receipts. They’ll ask you questions to determine your total income, deductions, credits and other items. Do not use a preparer who is willing to e-file your return using your last pay stub instead of your Form W-2. This is against IRS e-file rules.
Never sign a blank return
Don’t use a preparer that asks you to sign a blank tax form. That’s like giving a thief a blank check.
Review your return before signing
Before you sign your return, review it and ask questions if something is not clear. Make sure you’re comfortable with the accuracy of the return before you sign it.
Ensure the preparer signs and includes their PTIN
Paid preparers must sign returns and include their PTIN as required by law. The preparer must also give you a copy of the return.
Report abusive tax preparers to the IRS
You can report abusive tax preparers and suspected tax fraud to the IRS. Use Form 14157, Complaint: Tax Return Preparer. If you suspect a return preparer filed or changed the return without your consent, you should also file Form 14157-A, Return Preparer Fraud or Misconduct Affidavit. You can get these forms at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Keeping documents after taxes are done
You may be wondering how long you need to hold onto your receipts and paperwork after your taxes are done. The answer is, it depends. Here are some tips on how long to keep documents after filing your taxes.
- The IRS says that you are expected to keep receipts related to itemized deductions in this category for up to three years “from the date you file the income tax return on which the deduction is claimed.” That’s because the IRS has up to three years to let you know if they think you owe back taxes on any return you’ve filed.
- If you have a business with payroll, the IRS expects you to keep those records for six IRS years or seven calendar years.
- You should keep paperwork for any real estate transactions for at least three years after the deals closed. Personally, if I’d paid off a mortgage or sold a car or got the title to a car, I would keep that for at least seven years, if not indefinitely.
- However, if the IRS suspects that you have filed a fraudulent return or you have filed no return at all, you could be liable for taxes for an indefinite amount of time. In this case the statute of limitations–usually six IRS filing years–no longer applies. This link to the IRS website offers a good primer on what kinds of records to keep and for how long.
Hopefully this advice on getting taxes done helps you make it through this year’s tax season painlessly.
If you’ve bartered with anyone for your services, make sure you include this on your taxes, too.
April 15 is often a day to get a food or drink freebie. Check out my blog post on freebies on holidays.