In Shelby County, Alabama, filing taxes may be a difficult and intimidating undertaking, particularly for individuals and small company owners. A small error on your tax return might result in fines, processing delays, or even an audit. This article provides advice by a Shelby County, Alabama professional tax services on avoiding common tax filing errors and highlights some of them to help you get through tax season efficiently.
- Incorrect or Out of Date Information
Filing one or more line items incorrectly provides partial data and is the most common error taxpayer make on their tax return. Even a simple error, like misspelling your name or submitting an erroneous social security number can result in delays. These mistakes could result in a slow processing of your return or getting back the refund late.
Avoidance Tip: Be sure to review all personal information before filing your tax return. Be sure that the name or your SSN and bank account match up with how you have them on record at other entities. You should also check your tax return for any blank or incomplete fields.
2. Filing Under the Wrong Status
Selecting the appropriate file status is essential since it influences your standard deduction amount, tax rate, and eligibility for specific credits. Frequently used filing statuses include head of household, qualified widow(er) with dependent children, married filing jointly, married filing separately, and single. If you file under the incorrect status, you may end yourself paying more taxes than you need to or losing out on important credits and deductions.
How to Avoid It: Choose the filing status guideline that most closely matches your circumstances after carefully reading the IRS standards for each one. If you’re not sure which status to select, think about speaking with a Shelby County tax expert who can guide you toward the status that would work best for your situation.
3. Missing Tax Deductions and Credits
The deductions and credits can go a long way in reducing the amount that needs to be taxed. Other valuable tax deductions and credits, like the Earned Income Tax Credit (EITC), Child Tax Credit, or education-related deductions are simply overlooked by many taxpayers. Failure to take these can result in a higher tax bill.
What to Do: Learn about the specific deductions and credits that may be available based on your income, family circumstances, business affairs, etc. You can test out some tax software that may be able to prepare your taxes in Shelby County or you could keep a little more money and work with a great local independent contractor who knows how to use every deduction available.
4. Misreporting Income
Under- or over-reporting income is a typical error that is also committed by people. This may happen if you neglect to account for income from investments, rental properties, or freelancing. Income misreporting may result in fines, interest charges, or potentially an IRS audit.
Ways to Prevent It: All sources of income should be meticulously documented throughout the year, including W-2s, 1099s, and any other supporting evidence. To guarantee accuracy, check your records against the forms that your clients or employers have given.
It is a critical component that if not filed properly can lead to costly errors, delays, and even penalties. Avoid these common errors and get a head start on tax season. As an individual or small business owner in Shelby County, Alabama there is never a substitute for the guidance of a tax professional. They can assist you in working your way through any of the various aspects related to the tax code, all this while knowing that now if nothing is going wrong, and also can detect those things.