10 Mistakes To Avoid When Doing Your Taxes

With tax right around the corner, the Tax Resolution Institute is happy to provide you with a list of 10 common mistakes to avoid when preparing your taxes. If you owe over $50,000 in taxes this year or a back tax bill and you cannot pay, please contact TRI so we can find a solution for you.

1. Forgetting of not knowing about the “making work pay” credit. This was President Obama’s tax-cutting pledge on the campaign trail. It is now a reality, worth up to $400 per worker. People haven not learned how to claim the credit properly. As a result, it pops up as the most common mistake cited by the IRS this year. (As of April 2, the agency had notified more than 575,000 Americans of this error.) Open up “Schedule M” and grab those savings.

2. Rushing to “get it over with.” If you’re uncertain about a tax issue, it is better to file for an extension than to rush your taxes into the mail with the thought that you can amend it later if it is wrong.

3. Thinking that filing for an extension exempts you from paying. You still have to pay your taxes by April 15 (or you’ll owe a penalty). It is just the tax forms that can wait.

April 15 is Tax Day

4. Not attaching W-2 forms. Staple the forms to the front of your return, if you are a wage earner.

5. Not taking the home buyer tax credit. The housing market has been tough. It is even tougher if you bought your first home in 2009 and don’t take advantage of a tax credit worth up to $8,000.

6. Passing up the opportunity for tax-free retirement savings. April 15 is not just tax day; it is also the deadline for making contributions to an IRA (individual retirement account) for 2009. Build that nest egg if you can – and also report those IRA contributions as required by the IRS.

7. Letting your refund go astray. Double-check the routing numbers if you are seeking direct deposit of a tax refund. An incorrect account number or financial institution routing number can cause your refund to be delayed and even deposited into the wrong account.

The Tax Day Mouse Trap

8. Not adding enough paperwork with your state income-tax return. Some forms from your federal return may be required as add-ons. If you had capital gains, for example, you may need to enclose the federal Schedule D with your state return.

9. Mixing up where things are deductible. Income from US Treasury securities, such as Treasury bonds, is tax-exempt at the state level, but not at the federal level. Municipal bonds are exempt from federal taxes.

10. Failing to sign and date the return. If you file jointly, both individuals must sign. And if you owe money, remember to enclose payment. (If you pay by check, adding a memo “For Form 1040, tax year 2009″ can help ensure that your payment gets properly credited.)