You may remember the first time you filed your own tax return. Was it in high school when you got your first summer job? Maybe you did not make enough money to file a tax return until you finished college. No matter when it was, chances are that it was straightforward and simple. Your income likely came from one local source, and you probably used the 1040-EZ form.
Those days are gone. Your world is much more complex, and your taxes reflect that. Whereas at one time you may have been able to produce an adequate return with a computer program or a pop-up tax preparer, this year things are different. The complexity of your tax return may make you more susceptible to making some of the common errors taxpayers make on their returns.
The devil in the details
Confusion, frustration, fatigue or just being in a hurry can all lead to mistakes that, at the least, delay your refund or, at the worst, flag your return for an audit. This can be something as simplistic as transposing the digits in your social security number or copying the wrong total from your 1099 or other tax form. The IRS compares your return to the tax form, so they recommend you copy the amounts exactly instead of rounding.
Mathematical errors are the most common mistake self-preparers make, and these can create a ripple effect of problems all the way to the end of your return, especially if you still do your returns by hand. In fact, the IRS says those who file their returns on paper are 20 times more likely to make mistakes in calculations than those who use a professional preparer or electronic method.
Your income and deductions
Everything you earn is taxable income. Even if you have a client who pays you cash, that amount is still taxable. A client or company that pays cash over a certain amount should send you a 1099-MISC. However, your careful record-keeping may be more reliable. You will also receive 1099s for any investment income you earn. You must include any information from a 1099 somewhere on your tax return.
If you plan to itemize or if you realize your tax situation is too complex for you to risk doing it yourself, your best bet may be to seek advice from a tax professional. An attorney who is knowledgeable of the laws that affect your particular tax situation can reduce the chances of costly errors and advise you on how to maximize any deductions and tax credits for your benefit.