To err is human, especially at tax-filing time
Thursday, April 06, 2006
Yesterday I threw a couple of rocks at tax preparation chains that messed up client returns.
Today, I've been Windexing all the glass around my house and realized it's time to spread the tax gaffe blame around a bit.
We all make mistakes.
Hold on a second. I have to go revive the hubby, who's staggered to one knee and is gasping a bit after hearing my declaration.
OK, he's fine. He's going to pay for his smart*** attitude later, but he's fine right now.
Theatrics aside, I repeat: We all make mistakes. And tax returns are a prime showcase for our human (and mathematical) failings.
The forms, even the simple ones, are intimidating. The directions more unintelligible than a VCR owner's manual. And has anyone really ever sat down to fill out a return and had all the material necessary for the job right there on hand? I doubt it.
Even software is no guarantee. The adage garbage-in, garbage-out is the perfect motto for tax time.
So when we do get around to filling out our 1040 and various schedules, we're already psychologically primed to expect trouble. Adding injury to a process that insults our normal sense of self-confidence is the very real potential of tax filing mistakes to cost us big sums of money.
When I began writing about taxes many years ago for Bankrate.com, one of the first stories I did was on common filing errors. Every year, I look over that story and every year the list is pretty much the same as it was the previous filing season.
It seems we taxpayers are a pretty consistent bunch when it comes to our filing faux pas.
But there's always hope for that immaculate 1040 that produces an enormous refund! So this year as you're finishing up your return, look it over and make sure that you haven't made one of these missteps:
1. Incorrectly claiming a dependent
2. Making math errors
3. Omitting Social Security numbers
4. Forgetting to sign your return
5. Not using the preprinted label and envelope from the tax package
6. Not reporting interest and dividends
A 1099 slipped by me one year. I felt like an idiot when I got the IRS notice. I felt even worse when I had to write the check, complete with interest, to cover my error.
7. Overlooking charitable donations
8. Not including all your forms
9. Miscalculating investment basis
10. Using the EZ form when a longer form could cut your taxes
11. Making your tax payment check out incorrectly
12. Forgetting to bunch your deductions
13. Not taking all the credits you're eligible for
14. Using the wrong tax table
15. Missing the deadline to request an extension
16. Not putting the proper postage on your return package (See, I told you this list originated many years ago!)
Today's Tap Tip: Get details on each of these errors by checking out the full story here. Happy filing!
Lots o' lists: Free Money Finance lists five common filing mistakes: overlooking above-the-line deductions and credits; not itemizing; missing out on last-minute breaks; omitting key documents; making simple errors. Elaboration on each of these can be found here.
Over at MSNMoney, you'll find seven common mistakes.
Dollar Stretcher, living up to its name, offers 25 filing errors.
Even the IRS gets in on the fun. Hey, every error you find first might cost them some penalty and interest money, but it cuts down on the federal workload! This Web page notes the five most common filing errors the agency typically sees, and provides a lengthy checklist so you won't make them or any other mistakes on this year's return.
Whew! I'm starting to feel incredibly lucky that I've made it through a quarter century of filing with only a few minor scrapes!
Thinking ahead: And William Perez over at About Taxes notes that it's not just last-minute filers who make mistakes. Back in February, Perez already was helping clients file amended tax returns!
He points out some things to watch out for before you drop that 1040 in the mail or hit the "send" button, such as double checking your (and your dependents') personal data and making sure you've included all your income. If you've overlooked a 1099 that the IRS got a copy of, you can bet your return will be flagged. (I refer you to the personal notation in my above list.)
Perez also suggests a nifty way to deal with an unexpectedly high IRS bill: Set up your own installment payment plan by sending the IRS some of the tax due in February, another chunk in March and the final bit in April.
Unfortunately, although he made this point in February, I didn't get around to reading it until yesterday and sharing it today. But I'm definitely putting this in my "good tax idea" file for next season.
Yep, thinking 2007 taxes already. To paraphrase Robert Earl Keen: The tax road goes on forever and the party never ends!
Catching a carnival: This post is included in the 43rd Carnival of Personal Finance, hosted by MyMoneyBlog.
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