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Common tax filing errors to avoid

Frustrated-taxpayer-Ken_Hurst_iStock_000006713208XSmall Nobody's perfect. That's very evident every tax filing season.

The IRS keeps tracks of mistakes, by individual taxpayers and the tax professionals they hire to help them. The agency also tracks the errors based on the filing method, that is, electronically sent or mailed paper returns.

Through April 1, the number one error showing up by individual filers of all three forms -- 1040, 1040A and 1040EZ -- regardless of whether they e-filed or did their returns on paper, was related to the Making Work Pay credit.

Taxpayers got a message from the IRS that "Based on information provided on your return we have determined you are eligible to claim the Making Work Pay and Government Retiree Credit and have computed the credit for you."

Makes you wonder why the agency even bothered creating Schedule M, doesn't it?

Also making the top five of errors so far by individuals who do their own taxes are:

  • We changed the amount claimed as Making Work Pay. There was an error in the computation of the total amount. (Again, Schedule M seems extraneous.)
  • We changed the amount of tax shown on your return. The amount entered was incorrect based on your taxable income and filing status.
  • The refund amount or the amount you owe was computed incorrectly.
  • Earned Income Credit was figured or entered incorrectly.

Pro problems, too: The IRS also tracks errors made by paid preparers. Guess what was the top error for the professionals?

You got it.

Making Work Pay.

On both paper and e-filed returns.

That is one tax break, its $400 per person or $800 per married couple filing jointly notwithstanding, that a lot of folks, including IRS employees, are glad is gone!

Plenty of other errors: That data is why the Making Work Pay credit was number one on my list of 10 common tax-filing mistakes to to avoid.

Second on my list was the first-time homebuyer tax credit. Claims on 2010 returns could be complicated by the documentation required to ensure that the tax passes IRS examination.

Then there's the lingering matter of returns this year that included payback of the 2008 version of the homebuyer credit. Many of those are still delayed.

Other perennial filing problems are:

  1. making general math errors,
  2. picking the wrong filing status,
  3. entering in wrong bank account numbers when asking for direct deposit of your refund,
  4. overlooking 1099 income,
  5. making Social Security number errors (forgetting them or entering in wrong digits),
  6. overlooking deductible charitable donations,
  7. forgetting to sign the 1040 and
  8. missing the filing deadline (remember, it's April 18 this year).

How'd you mess up? Of course, those are just the most commonly made mistakes. I'm sure we all have our own tales of how a 1040 tripped us up.

One year I entered the wrong amount of tax due on our return. I used the amount due from single filers instead of couples filing jointly.

My error didn't cost me. In fact, the IRS caught my mistake, sent us the proper (and larger) refund amount and I learned to pay closer attenton to those columns of tiny numbers in the return instruction book (or use tax software which enters the amount for you).

Do you have a story about a filing mistake that cost or benefited you? Or perhaps a a suggestion that will help someone else's filing go smoothly? Please share in the comments section.

Frustrated taxpayer photo by Ken Hurst/iStock

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